For the past few days, Bitcoin had been consolidating just below the key $4000 level. In yesterdays analysis, we noted that this was more of a bearish set-up and makes the price more susceptible to dropping from that point.
A drop followed, and we have seen price move from consolidating around $3900 to trading around $3600 today. The low for 2018 was formed around $3500, and this most recent drop makes a new low a strong possibility. A new low forming would result in their being a strong chance of price potentially continuing its bearish movements to $3000. $3000 is noted as a key area for price action being both a round psychological number and an area of important trading activity in 2017.
The drop which is after taking place successfully executes a bear flag on the weekly chart. The candle for last week formed as a Doji. A Doji is a candle where the open is around the same point as the close and reflects uncertainty on the side of traders. Although there were more bullish market movements last week, traders were likely cautious to drive the price up fearing a return to bearish market conditions that we are seeing today.
The drop over the past day is extremely bearish for the outlook of Bitcoin. It is taking place on significant volume, and from a technical standpoint, it makes bullish movements from here far less likely. The weekly RSI and MACD are decreasing reflecting the strong seller momentum.
- Bitcoin has returned to recording bearish market movements after consolidating below the key $4000 level.
- New 2018 lows are highly likely for Bitcoin, and $3000 is also a strong possibility.
- Bear flag executes on the weekly chart. Weekly RSI and MACD also decrease reflecting the bearish momentum.
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