Last night BTC closed the week in the red, producing the second red week in a row. During the week price dropped to below $8000 but rebounded strongly over the weekend, closing the week around $8500, only $100 below where it opened. Price action is still trading in a consolidating market, with the 50-week moving average forming the lower bound after acting as support in early April.
The MA50 on this chart is of key concern; historically a drop below the MA50 on the weekly chart has resulted in a significant bear market, read more here. However, the crossover of the EMA8 above the MA20 would return BTC to a bull market on the weekly chart. A break above $9000 may be what is required for this.
1 Day Chart
On the daily chart you can see that the latest reversal in price started on Friday, after support was found in the $8000 range. A brief break below the 50-day moving average was cause for concern but no crossover of the moving averages occurred. Currently price action is trading in a consolidating market with both the MA50 and EMA8 potentially acting as support.
The MA50 is sloping upwards for the first time in a few weeks, which is a good sign, indicative of an increase in upward momentum. However, the bears still have significant control over the market at the moment and a retest of $7800 is still possible. Conversely, a break above $9000 will put the bulls back in control.
On the 4-hour chart the bulls are poised to take control. Currently the chart is still in consolidation phase, as the EMA20 is trading below the MA50, but the EMA8 has already crossed over the MA50. The next resistance level to overcome is $8650, followed by a breakout of the reversal zone. This would also complete the inverse head and shoulders pattern which is forming, a reliable reversal indicator.
Downside risk is that $8150 does not hold, this would likely be followed by a retest of $8000 and $7800.
As it stands currently, I am watching the moving averages for a crossover of the EMA20 and the MA50, this is a good indicator of the short term chart turning bullish.
The key concern over the longer time frame here is that of another false breakout, as we have seen multiple times over since the start of 2018. Over a longer time scale we are looking for a break above $8400 and the 50-day moving average to provide the first signal that we are ending the bear market (achieved). Following that, a break above $12 000 is required to fully substantiate the new bull market. Conversely, for the bears to regain control of the daily chart we would need to see a break below $7800 and the 50-week moving average (on the weekly chart).