Bitcoin Price Grapples With $10K — 2 Scenarios for the Week Ahead

Published at: Feb. 23, 2020

Bitcoin (BTC) bears took their pound of flesh last Wednesday. However, was this simply a long-overdue correction that was needed for Bitcoin to continue to rally to fresh highs?

Today I’m going to look at the two scenarios that could play out next week.

Daily crypto market performance. Source: Coin360.com

The bearish scenario for Bitcoin price

BTC USD daily chart. Source: TradingView

It was a devastating blow for bulls last week on Wednesday, Feb. 19, as Bitcoin fell by approximately 10% in a single hourly candle. However as can be seen in the chart above, this channel had already been invalidated two candles prior, and what followed next is what seems to be a blatant display of whale flexing designed to leave both left both longs and shorts completely rekt.  

This leaves Bitcoin in the early stages of a descending channel, which could see the leading digital asset retrace to $7,500 over the next 2-3 weeks. So right now, it’s important for Bitcoin to break out of this channel to reclaim a bullish trend. 

The resistance here is $9,900 (which is what the price is currently at) and the support is $8,950. However, what if the original ascending channel wasn’t valid? 

The bullish scenario for Bitcoin price

BTC USD daily hourly. Source: TradingView

The bull in me wants to believe that the low we hit last Wednesday of around $9,250 has opened up the possibility of a slightly wider ascending channel, one that now sees support at $9,500 and resistance at $10,300 and then $11,085.  

Annoyingly since the CME closed at $9,740 on Friday, both channels would remain valid in the highly likely event of the gap-filling in the week ahead.   

As such, a glance at some key indicators can perhaps give some insight as to what we can expect. 

The Relative Strength Index (RSI) indicator is neutral 

BTC USD daily hourly. Source: TradingView

The Relative Strength Index (RSI) Indicator remains remarkably neutral, with a reading of 56.07 on the daily. However, it did show Bitcoin as being massively overbought in the days leading up the selloff. 

Bitcoin bounced off 50.16 on Feb. 20 and changed its trajectory from heading to oversold back up towards the overbought range. However, it’s too early to tell, but this could still go either way right now, and the weekly view of the RSI is very much the same. 

The MACD is showing early signs of a bullish reversal

BTC USD daily hourly. Source: TradingView

The Moving Average Divergence Convergence (MACD) is slowly starting to pinch up, this is an early sign that we are going from bearish to bullish. This is further echoed by the pale pink candle on the histogram. 

This can also be interpreted as bearish to an extent. However, the weekly MACD is still in full bullish flow, and past performance of Bitcoin when the MACD has crossed bullish on the one-week chart has typically led to several months of price increase, while also keeping in mind that we’re only one month in. 

Which leaves one last indicator that seems to have been impacting the price lately.  

Mining difficulty in decline

BTC mining difficulty. Source: BTC.com

Next week, the mining difficulty is set to be around -1%, the first expected drop this year.  

Given that the price has increased around the same time the difficulty has gone up, it would indicate that the week ahead is unlikely to be bullish or bearish, but rather quite a neutral week of sideways action.  

Summary 

The week ahead for Bitcoin looks to be rather neutral. As a trader, I’m looking for confirmation of the bullish or bearish scenarios laid out in today’s analysis.

Should $9,500 fail to hold as support, then I’ll be looking at the bearish scenario, which shows the next level of support at $8,950. 

Should $9,500 serve as support, I’ll be looking for a daily close above $9,900 before assuming the bull trend has resumed. From here I’ll be looking at $10,300 as key resistance, with the breakout resistance being above $11,085. 

The views and opinions expressed here are solely those of @officiallykeith and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Tags
Bitcoin
Bitcoin Price
Markets
Market Analysis
Related Posts
Bullish Bitcoin newsflow gives bulls a boost ahead of Friday's $565M options expiry
On Friday, June 11, a total of $565 million in Bitcoin (BTC) options are set to expire. This is significant because the last couple of weeks have been a massive deception for bulls. After all, the price was struggling to sustain the $33,000 support. However, an unexpected bullish turn of events led to an 18.5% hike from the $31,000 low on June 8 to $38,491 today. This strong move saved the bulls because any level below $34,000 would have wiped 98% of the current call (buy) options. Who saved the day? First, MicroStrategy, a publicly-traded company that holds over $3.2 …
Bitcoin / June 10, 2021
Bitcoin On-Chain Data Suggests Miners Expect Halving to Pump BTC Price
As the coronavirus pandemic continues to unfold and new signs of lockdowns beginning to be slowly lifted in Europe, all eyes in the crypto community are back on the Bitcoin (BTC) halving. The event is only 10 days away, and Bitcoin’s price seems to be acting accordingly, having surged an incredible 23% to a monthly high above $9,400 earlier this week. A widely celebrated event in the cryptocurrency industry, the halving is part of the Bitcoin monetary policy, in which every four years, the Bitcoin mining reward is cut in half. This means that on May 11, 6.25 BTC will …
Bitcoin / May 1, 2020
Did BTC Miners Crash Bitcoin Price With 51 Days Before the Halving?
Bitcoin (BTC) price has started to show strength in its recovery since the black Thursday selloff this past week, but is this something we can expect to continue? Or is this a dead cat bounce on the way down to lower lows? In today's analysis I’m looking not only at the charts, but also at the possibility of large Bitcoin miners being the cause of the 50% price drop on March 12, after supporting data emerged last week suggesting that short-term holders sold a whopping 281,000 BTC, which resulted in the crash. Daily crypto market performance. Source: Coin360.com Did miners …
Bitcoin / March 22, 2020
Elon Musk, Cathie Wood sound 'deflation' alarm — is Bitcoin at risk of falling below $14K?
Bitcoin (BTC) has rebounded by 20% to almost $22,500 since Sep. 7. But bull trap risks are abound in the long run as Elon Musk and Cathie Wood sound an alarm over a potential deflation crisis. Cathie Wood: "Deflation in the pipeline" The Tesla CEO tweeted over the weekend that a major Federal Reserve interest rate hike could increase the possibility of deflation. In other words, Musk suggests that the demand for goods and services will fall in the United States against rising unemployment. A major Fed rate hike risks deflation — Elon Musk (@elonmusk) September 9, 2022 Rate hikes …
Bitcoin / Sept. 12, 2022
Total crypto market cap falls to $840 billion, but derivatives data shows traders are neutral
The total cryptocurrency market capitalization dropped 1.5% in the past seven days to rest at $840 billion. The slightly negative movement did not break the ascending channel initiated on Nov. 12, although the overall sentiment remains bearish and year-to-date losses amount to 64%. Bitcoin (BTC) price dropped 0.8% on the week, stabilizing near the $16,800 level at 10:00 UTC on Dec. 8 — even though it eventually broke above $17,200 later on the day. Discussions related to regulating crypto markets pressured markets and the FTX exchange collapse limited traders' appetites, causing lawmakers to turn their attention to the potential impact …
Bitcoin / Dec. 8, 2022