Bitcoin Price Defies Oversold Conditions to Hit 15-Month Low

Omkar Godbole
Dec 14, 2018 at 11:00 UTC
Updated Dec 14, 2018 at 11:14 UTC
markets

Bitcoin (BTC) tumbled to 15-month lows earlier today, dashing hopes of a rally signaled by current extreme oversold conditions.

The world’s largest cryptocurrency by market capitalization fell to $3,200 on Bitstamp at 00:15 UTC – the lowest level since September 2017.

BTC was trapped in a five-day-long narrowing price range 24 hours ago and showed signs that it might break upwards with a strong move toward the crucial resistance at $3,633.

These bullish expectations were based largely on a premise that the sellers are facing exhaustion, as indicated by the 14-week relative strength index (RSI), having engineered a 49 percent price drop in the last four weeks.

Further, evidence of bargain hunting had emerged earlier this week in the form of a three-day inverted hammer candle.

Even so, BTC dived out of the narrowing price range in U.S. trading hours yesterday, killing the prospects of a short-term inverted hammer bullish reversal above $3,633.

BTC’s persistent failure to produce a notable price bounce despite extreme oversold conditions indicates that the bearish sentiment is very strong. As a result, a convincing break below the 200-week moving average (MA) support of $3,170 cannot be ruled out.

At press time, BTC is changing hands at $3,250 on Bitstamp, representing a 2 percent decline on a 24-hour basis.

4-hour chart

The symmetrical triangle breakdown seen in the 4-hour chart indicates a resumption of the sell-off from the Nov. 29 high of $4,410.

The stacking order of the 50-candle moving average (MA), below the 100-candle MA, below the 200-candle SMA, is a classic bear indicator. The RSI has also fallen back into bearish territory below 50.00.

BTC, therefore, risks falling to the psychological level of $3,000. On the way lower, it may encounter support at $3,179 (200-week MA).

Daily chart

As seen above, BTC has charted lower price highs (marked by arrows) along the downward sloping 10-day exponential moving average (EMA). Notably, BTC persistently failed to close above that EMA hurdle at the end of the last month.

Hence, the 10-day EMA, currently at $3,465, is the level to beat for the bulls.

View

  • The range breakdown on the hourly chart may have opened the doors for a deeper drop to $3,000.
  • The 14-week RSI remains below 30.00, marking oversold conditions. Recent price action, however, indicates that the market is paying little heed to the indicator.
  • A UTC close above the 10-day EMA of $3,465, if confirmed, could be considered a sign of short-term bullish reversal.

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

Bitcoin image via Shutterstock; 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.