Bear Trap? Bitcoin Price Bullish Divergences Emerge Amid Market Fear

While Bitcoin worth (BTC) is transferring in a detailed vary and altcoins begin to transfer upwards, the general sentiment of the market continues to be worry.

Crypto market data. Source: Coin360

Fear is a traditional expression seen from buyers throughout downwards trending markets as merchants and buyers are usually fixated by brief time period actions, much like the euphoria in December 2019. 

However, is it justified to have this worry checking the macro perspective of the market, or is it offering an awesome purchase alternative?

Bitcoin caught in a cage

BTC USD weekly chart. Source: TradingView

Bitcoin worth motion continues to be displaying some similarities to the earlier bull market which began on the finish of 2015. The worth is holding on to the 100-Week Moving Average, whereas additionally approaching a possible trendline marking a brand new upwards pattern. 

BTC USD daily chart. Source: TradingView

On the day by day timeframe, resistance could be noticed by utilizing the transferring averages. As acknowledged beforehand, the assist proper now’s the 100-Week MA, whereas the higher resistances are the 200-Day MA and Exponential Moving Average. Notably, because the short-term backside round $7,600, a small bullish divergence could be noticed.

A bullish divergence pops up when costs fall to a brand new low, whereas the indicator is displaying the next low. Often a bullish divergence indicators the tip of a downtrend. Take the next day by day charts for instance of this incidence. 

BTC USD daily chart. Source: TradingView

During the 2019 bear market, comparable indicators got throughout a pattern reversal. A significant pattern reversal befell throughout the backside in December 2019, when a large bullish divergence signaled a backside forming. After this the worth reversed and began to pattern upwards, briefly ending at $13,800 on June 26.

Interestingly sufficient, the identical bullish divergences are displaying on the chart at this level, however they nonetheless should be confirmed. Take notice that the upper the timeframe the place a divergence happens, the extra vital it’s.

Total market capitalization in a bear entice? 

Total Crypto Market Capitalization USD chart. Source: TradingView

The whole crypto market capitalization usually gives a clearer view of the market than Bitcoin alone.

During the 2019 bear market, a transparent downward pattern with decrease highs and decrease lows was outlined. In the present market an uptrend with larger lows and better highs could be noticed.

The whole crypto market capitalization seems to be to be in a large falling wedge (start line the highest finish of June 2019) with a possible backside forming happening proper now on the earlier vary low of $185-200 billion.

Similar to that, the view could be outlined as a possible bear entice in response to the next graphic of the overall market cycle. 

General Market Cycle. Source: Forbes. 

Not solely is a possible bear entice is displaying up right here, however from a macro perspective the market seems to be to be retesting a number of earlier ranges for affirmation earlier than persevering with the upward pattern in direction of 2020.

Altcoins offering alternatives

Total altcoin market capitalization — USD chart. Source: TradingView

Altcoins have been transferring in each instructions over the previous few weeks whereas the full market capitalization is remaining pretty secure.

Altcoins charts present {that a} comparable setup could be discovered within the latest actions. The altcoin market capitalization is resting on a reasonably essential order block which supplied assist earlier than the large breakout throughout November 2019.

Aside from the significance of this order block, a earlier resistance can also be being examined as assist. During the primary actions of 2019, the altcoin market capitalization could not break above the $60-62 billion ranges. However, latest actions have proven that this stage could be relied on to supply assist.

Keeping this angle in thoughts, there’s additionally the potential of a falling wedge construction being noticed, which has similarities to the full market capitalization.

Bitcoin Dominance breaking down 

Bitcoin Dominance chart. Source: TradingView 

As beforehand talked about, bullish divergences most frequently sign a possible pattern reversal on the backside. The different manner round, bearish divergences most frequently sign a possible pattern reversal on the high.

Since the rising wedge construction broke down on the Bitcoin Dominance, the extent of dominance has been taking place considerably. This brought on altcoins to maneuver upwards towards Bitcoin. Take for instance, Ether (ETH) went up 37% towards Bitcoin, XRP went up 50% and even 0x (ZRX) made a rise of 175% towards Bitcoin.

Bitcoin Dominance daily chart. Source: TradingView

Zooming in on the day by day time body exposes a bearish retest and a assist/resistance flip could be noticed on the 69.50% stage. Given that the extent flipped bearish, the dominance ate is prepared for an additional downfall in direction of 67% and probably 65.60%.

Bullish state of affairs

Bullish Scenario Cryptomarket. Source: TradingView

All in all, the market is as soon as once more behaving in an fascinating construction and probably calming down earlier than the subsequent storm.

In a bullish state of affairs, the market has to carry the $185-200 billion stage as assist, throughout which a bullish assist/resistance flip could be confirmed. When this occurs, a goal of $250 or probably $360 billion are on the desk for This fall of 2019 and Q1 of 2020. 

The foremost requirement for this may be discovered within the Bitcoin chart. Bitcoin has to carry its assist of the 100-week MA and breakout upwards from this construction.

If bullish, Bitcoin will escape upwards by the vary it beforehand moved in. Looking again on historical past, altcoins have a tendency to maneuver finest when Bitcoin has discovered its backside from a corrective transfer and begins to grind upwards. Altcoins then are inclined to outperform Bitcoin. Examples for this are the primary months of 2019 and 2019.

Bearish state of affairs

Bearish Scenario Cryptomarket. Source: TradingView

 A bearish state of affairs could be discovered by the next setup by which higher ranges cannot be flipped for assist and bearish retests proceed to happen. In this case, the falling wedge received’t be confirmed and continued downwards actions are prone to occur.

On the flip facet, on this state of affairs, Bitcoin will lose the 100-week MA and goal the $6,500 and $5,500 zone for subsequent assist areas. Similar to that, the full market capitalization might be looking for stability across the $155 billion or $125 billion mark.

But in crypto, occasions all the time happen as a shock and heavy volatility is the norm. Either manner, the market is making itself prepared for one more large transfer. 

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