Market conditions remain extremely bearish as Bitcoin traded near 2018 lows over the past two days. A low for 2018 was formed on Sunday just below $3500. The price had since recovered to above $4000 but has returned near lows currently trading around $3700.
While price continues to drop lower, the daily RSI is actually forming a higher low resulting in a bullish divergence. This is a typical trend reversal sign but may have little impact given the strong seller momentum. The MACD continues to diverge to the downside indicative of the strong seller momentum.
While yesterday saw price action drop on large volume, today’s drop has been on far lower volume showing buyers coming in as price approaches the 2018 low point. Around $3500 will be the key support point given this is around where the 20188 low formed. The next significant resistance is likely to be $4000.
On the short-term hourly chart, we are starting to see more buying pressure coming into play as price reapproaches its 2018 low. Traders should still be cautious of long positions given that recent price action had seen sharp drops taking place even when buyers seemed to be coming into the market.
Some short-term resistance may be the hourly 50 EMA with price reversing on several occasions after approaching this point. Price action approaching the 50 EMA would be a potential catalyst for the next drop.
The cryptocurrency market cap currently trades around $122 Billion after trading around $211 Billion just two weeks ago. This is a huge decrease in the valuation of cryptocurrencies over a short period of time.
Key Takeaways:
Bitcoin returns near 2018 lows, but buyers may be coming into play as the drop slows.
A bullish divergence is taking place between the daily price and RSI, but momentum is still strongly on the side of sellers so traders should be cautious of taking long positions.
Hourly 50 EMA seems to be acting as a short-term resistance point.
