What Does Technical Analysis Tell Us About Bitcoin Prices?

What Does Technical Analysis Tell Us About Bitcoin Prices?


Bitcoin prices have been trading within a reasonably well defined range, a state they have continued to experience for several weeks.

The world’s most prominent digital currency has been trading largely between $30,000 and $42,000 since late May, according to CoinDesk.

It has been following this pattern after rallying to a fresh, all-time high of more than $64,000 back in April, before losing much of what it gained in 2021, additional CoinDesk figures reveal.

As the cryptocurrency continues to experience this relative malaise, various technical analysts have weighed in on when it might see greater volatility.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

The ‘Calm Before The Storm’

“We are clearly in a consolidation phase which can also be called the ‘calm before the storm,’” said Kiana Danial, CEO of Invest Diva. “That means, we are bound to see a breakout soon.”

She elaborated on this statement, providing analysis indicating that bitcoin’s current momentum is a little bearish.

“The BTC/USD pair remains below the daily Ichimoku cloud and has broken below the 4-hour Ichimoku cloud, indicating the bearish pressure is stronger than the bullish,” said Danial.

“Additionally, the pair has been forming lower highs in the past month, also indicating the bearish sentiment is slightly stronger than the bullish one.”

David Keller, chief market strategist at StockCharts.com, offered a similar perspective.

“The chart of Bitcoin has been in distribution mode since April, with successively lower momentum peaks on each rally over the last three months,” he stated.

“I would expect the path of least resistance to remain lower given the weakened momentum characteristics.”

A Bullish Assessment

Nick Mancini, research analyst at crypto sentiment data provider Trade The Chain, provided a more bullish perspective than the aforementioned experts.

“Looking at Bitcoin’s future, we can see a glimpse of bullishness on the price chart,” he stated.

“The Bollinger Bands (BBs) are currently tightening around Bitcoin’s recent movements, which is usually a signal for a large move in price. It is currently trading on the lower bound band, and we expect that it may reverse in the near future given the recent sentiment spike,” said Mancini.

Further, he noted that there is “an inverse head and shoulders forming.”

“Inverse head and shoulders have two shoulders, a head, and a neckline, and typically push bullish if and when the neckline is broken. In this case, the neckline is the 200-Day Moving Average, which has been a stalwart for Bitcoin price action since June.”

Levels To Watch

As market observers continue to monitor bitcoin’s price movements, analysts weighed in on the key levels of support and resistance they should look out for.

Mario Gomez Lozada, CEO of trading platform PowerTrade, noted that “BTC has been consolidating between 0.618 and 0.5 fib levels that has created strong bearish and bullish cases.”

“If BTC price breaks down the support of 30-31k, it could go straight down to the next fib support level which is at around 24.8k that can potentially touch the long term trend line (yellow) at 20k,” he added.

Keller spoke to similar numbers, stating that:

“Bitcoin’s decline has been tempered in May and June as price has found consistent support around the $30,000 level. A break below this key support level could indicate a new influx of selling that could push Bitcoin down to the low $20,000s.”

However, the two analysts also mentioned important resistance levels the digital currency could encounter.

“A break above $40,000 would negate the downward trend we’ve seen in recent months and suggest further upside,” said Keller.

“First, Bitcoin would need to eclipse trendline support using recent highs on the hourly chart, currently around $34,000.”

Lozada said that if the digital asset surpasses $39,000 before the end of this month, it will “break out to the upside in a very quick fashion” as it continues the bull run.

He emphasized that “As the Bollinger Band is very stretched,” bitcoin could potentially enjoy significant upside.

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.



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