In this article I walk you through what has happened in the previous week and what are the things to observe within Bitcoin.
Last week was surprising to many traders as the bearish momentum went through some of the strong support areas in a similar way to a knife going through of butter. However, there are things stirring underneath that are revealing a major support zone and the weakening strength of bears.
Cryptocurrency Weekly Overview:
1. NYSE is launching Bitcoin Market.
2. Starbucks is starting to accept crypto payments.
3. OKEX $9 million clawback.
4. Coinmarketcap had “data issue” that caused coins to inflate by nearly 1000%.
Global Market & Dominance
On Aug 5th, the total market capitalization reached $250 billion which was the lowest point. The highest point was reached on July 30, which was $299 billion. The total market capitalization is now hovering around $256 billion.
The total market capitalization is down roughly by $33 billion when compared to the previous week.
Last week The dominance of Bitcoin was ranging in between of 47%-48% and staying stable.
While the share of other currencies remained stable last week.
Why it’s important to keep monitoring dominance?
It reveals information that is valuable when coordinating with the cryptocurrencies. Each time the dominance of Bitcoin has increased significantly, it has caused the altcoins to collapse and decline. However, when the dominance of Bitcoin has decreased, the price of altcoins have increased significantly!
What’s the situation with Bitcoin?
This is the first time during 2018, when there have been 7 red candlesticks in a row on the daily chart. When looking into the volume, we can say it was not considerably huge during the dip. What does this mean? It indicates that bears are losing strength and that there are not so many sellers left. This gives the bulls a chance to show what they are made of.
The volume can be compared easily on the 3 day chart that reveals this information for us. This is a strong signal that bears are getting exhausted and big players are looking to buy these dips. On the other, hand bulls are showing increased volume and interest since July.
On the daily perspective we are back in the April lows and in a support zone ($6,962 – $6,778). The strength of this area can be determined by looking at the previous movements in this range. This area should be tested properly.
What’s interesting in here is that the moving averages are getting closer and curving towards each other.
The price didn’t manage to break through the MA200 nor the green resistance line. This led the price to move further downwards. It has reached the middle of the pitchfork which has been working as resistance and was support in the past. What’s the difference to the past and why is this area noteworthy? The main difference is that the price is now in the intersection of supportive elements such as MA50, 0.618 fibonacci level (statistically the most optimal level for reversal to happen), the long term support area formed in range of $6,700 – $6,900 levels. We didn’t see these elements on the daily timeframe in the past when it reached the middle line of the pitchfork. That’s why it’s important to pay more attention to this level than usual.
The Weekly Chart
A close above was required on the weekly chart to continue it’s move higher but it eventually got rejected by the MA50. Even though last week was showing a red candlestick it might not indicate a continuation in downward movement. Now it’s time to observe and see where the price action takes us.
Holding support area on the weekly is crucial on the longer term perspective and closing above this level is keeping higher low formation intact on the larger scale. On the other hand, a close below would take us more likely back to the $6,000 area.
The downtrend line
My latest observation is downtrend line, it was intact since the beginning of the year and it managed to get above it in July. After getting rejected by MA200, it’s back in the downtrend line and testing it from above. What tends to happen after each breakout? They push really high or they return to test the breakout. In this case it is the downtrend line.
Overall it’s not looking that bad and should remain cautious. As shown in this article there are many aspects that are supporting a reversal and it can take a day or few before any action is seen. On the shorter term we are possibly seeing minor retraces and pullbacks.
I personally believe that when observing 3 day and weekly timeframes that they are actually giving valuable information on the larger scale price movements and trend reversals. Also I’m more comfortable with higher timeframes as they are showing something that you can’t see on the smaller timeframes that easily.
There are 3 significant things that you can’t ignore when observing the larger scale information on Bitcoin. They are:
1. 3 day chart is showing that bears are getting exhausted by producing lower volumes on each decline.
2. Bulls are already showing uptrendish volume and breaking the declining volume pattern on the weekly timeframe.
3. Fundamentals, something not to ignore. They are stirring up underneath, news are super positive and adoption is growing.
Feel free to post your ideas, questions or anything that comes up to your mind down below.
If you need help with trading, finding information, or courses let me know and I’d be more than happy to help you!
Things to Remember:
- Stop-loss orders are strongly recommended.
- Beware of buying tops or FOMOS, you might end up losing or waiting long periods of time before getting anything back.
- Do your homework before investing.
If you do enjoy these weekly updates on Bitcoin I create, then don’t forget to give it a like and follow me for further updates!
Each week I’m adding new information that are potentially helping traders & investors to understand the fundamentals of trading and how the market cycles work with cryptocurrencies. Past two weeks I have been focusing on the dominance and the importance of it which gets ignored rather often.
Please be aware this is not financial advice. You are responsible for your trading and investing decisions. It is highly recommended to do your own research before investing in anything.
My list of trading tutorials:
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Trade altcoins – https://www.binance.com/?ref=10803871
Tradingview – https://www.tradingview.com/u/yarr/
Also published on Medium.