Bear bottom?: A technical analysis of the cryptocurrency market

At the time of writing, cryptocurrency prices are still looking bearish. I’ll use this opportunity to share the analysis of CoinSheet’s analyst Nick Core, a veteran crypto trader.

As the weekly candle closes with a ridiculously bearish trend, I can’t help but wonder when we’ll have a week of relief. Taking a look at the Guppy Multiple Moving Averages, the weekly trend shows us oversold conditions.

Typically, when I see a trend this strong with a bearish bias, I either stay out of the markets or retain a portfolio hedge.

Moving on to the daily Bitcoin charts to see where our potential bottom is on the current wave, I can see the fifth wave has met the minimum criteria needed for a reversal.

However, nothing is absolute with technical analysis, let alone Elliott waves.

The fifth wave is extremely truncated considering the strength of the selloff lately. More reasonably, I think the support range between $2,800 to the high $2,900’s (depending on the exchange) is a better ending that matches the strength of prior waves.

That being said, we are in a price level scenario that is extremely complex. A rally upwards above $3,259 would cause a breakout upwards, and ultimately a test of $3,398.

At that point, if volume can maintain a trend upwards on the daily Chaikin Money Flow to the median line, then I would expect this ABC correction to take place and confirm on the $3,398 break.

Daily support definitely needs to be found at this level, and I need to see a daily close above this level in order for me to confirm the ABC correction upwards.

Volume is key in predicting resistance rejections. I believe it’s really the core of any form of predictive analysis.

So as the week goes on, I will be watching for severe spikes upwards from sellers to determine whether the trend can be broken or if my more “reasonable” fifth wave will transpire.

There are multiple bull divergences on the daily time frames – much more than the previous several weeks. At some point, this market will need to allow those to breath.

Will it be the bottom?

There is nothing on the technicals confirming or denying a bottom.

I would be wary of anyone who says with absolute certainty we have bottomed at any point without providing a technical confirmation. When the market is bullish and out of the bear, you’ll know.

Bitcoin screams when it needs to establish its dominance. Technicals will only offer an exact entry metric. You’ll feel the bull without even having to do a TA.

However, let’s take a look at the weekly RSI. We can definitely take some interesting conclusions from this chart.

The last time the weekly RSI was that low, the 2014 bear market ended. If you don’t remember how that went, let’s have a refresher session.

After that, it was all fun and games till the big drop during January 2018.

Can I confirm the bear market is over?

I wish. I’ll keep adding to my personal portfolio, as long as Bitcoin remains below $4000-4500, as I really like to keep my money where my mouth is. But this is just me and is definitely not a financial recommendation.

Still, if you bought during the hype, this seems like a great opportunity to average losses.

Disclaimer: This article shouldn’t be taken as financial advisement; it represents my personal opinion and should not be attributed to Coin Rivet. I have savings invested in cryptocurrency so take whatever I write with a grain of salt. Do not invest what you cannot afford to lose and always read as much as possible about a project before investing.