Bitcoin Bounce Capped by $10K Price Resistance

Omkar Godbole
Jul 18, 2019 at 11:00 UTC
Updated Jul 18, 2019 at 15:35 UTC
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  • Bitcoin’s recovery from $9,049 to $10,000 lacks substance and may be short lived.
  • Signs of bullish exhaustion near $10,000 have emerged on the 4-hour chart. A break below $9,580 would confirm the corrective bounce has ended and allow a drop to $9,000.
  • Moving average (MA) studies and key indicators like the relative strength and the Chaikin money flow indices on the daily chart continue to call a bearish move.
  • A high-volume break above $10,000 could yield a move to $10,400, but a 4-hour close above $11,080 is needed to invalidate the short-term bearish setup.

Bitcoin’s recovery from one-month lows looks to have stalled near $10,000 and the cryptocurrency may end up charting a bearish lower high around the psychological resistance level.

The top cryptocurrency by market value slipped to $9,049 in the European trading hours yesterday, the lowest level since June 19, according to Bitstamp data. That drop came after the bullish higher-lows pattern was invalidated with a move below $9,614 on Tuesday.

The drop was short-lived, as expected, though. Prices bounced up in the U.S. trading hours, keeping the former resistance-turned-support of the $9,097 May 30 high intact.

The recovery, however, looks to have run out of steam, and BTC has spent a better part of the last 13 hours struggling to settle above $10,000.

A persistent failure to convincingly beat $10,000 means the market is no longer viewing sub-$10,000 levels as an opportunity to get involved in the bull market the way it did on July 2, when prices charted a V-shaped recovery from $9,614 to $11,000.

Further, technical charts indicate the bounce seen in the last 24 hours lacks volume support. So, the odds appear stacked in favor of the creation of a bearish lower high at $10,000 and a fall back to $9,000 in the next day or two.

As of writing, BTC is changing hands at $9,850 on Bitstamp, representing 3.5 percent gains on the day.

Hourly chart

Buying volumes (green bars) on the hourly chart have been very low throughout the price bounce from $9,049 to today’s high of $10,027.

A low-volume recovery often ends up as a “dead cat bounce” – a short-lived recovery after a notable price drop – meaning BTC will likely fall back to $9,000.

Sell volumes (red bars) have been consistently higher than buying volumes ever since BTC topped out at $13,200 on July 10 – a sign of change in market sentiment.

4-hour and daily chart

Multiple candles with long upper wicks (above left) near $10,000 indicate BTC’s recovery has run out of steam near $10,000. A break below $9,580 – the low of the doji candle created in the Asian trading hours – would confirm a bearish lower high at $10,000 and allow a drop to $9,000.

The bearish view would be invalidated only if prices invalidate the lower-highs pattern with a high-volume move above $11,080.

That, however, looks unlikely as the daily chart is biased bearish. The 5- and 10-day moving averages are trending south, indicating a bearish setup. The 5- and 50-day MAs are teasing a bearish crossover.

The Chaikin money flow index is now barely holding in positive territory compared to highs above 0.35 seen at the end of June. That indicates a significant weakening of buying pressure.

Further, the relative strength index is reporting bearish conditions with a below-50 print.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via CoinDeskArchives; charts by Trading View

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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.