Another Bitcoin Plunge?

In the middle of August, there were technical signs that the rebound in Bitcoin was over. After a 17% rally from the July lows it dropped 7% on Friday, August 19th. This was a sign that the continuation pattern (see chart below) that had formed since the June lows, lines a and b, has been completed.

At the time I commented that the close below “ the monthly pivot at $22,231 makes the next likely target at $19,844 which is the S1 support.” As it turned out Bitcoin dropped to a low of $19,527 on August 28th. It then moved sideways for a week before it declined to $18,559.

That set the stage for quite a rebound, as the July rebound had convinced many that Bitcoin had bottomed. The seven-day rebound in early September reached the $22,767 level and the former support, now resistance, at line b. My August analysis had identified resistance at $22,231 to $23,265.

The sharp reversal to the downside on the CPI report has reaffirmed the downtrend with the monthly S1 support at $17,984 and the S2 at $15,918. The on-balance-volume (OBV) is plotted below the bar chart and it is my favored volume indicator. The OBV has formed lower lows after plunging sharply in June. It is possible that new price lows may not be confirmed by new lows in the OBV but for now, the trend is down.

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My weekly analysis has been the focus since the start of the year as I noted that the rally early in the year failed to overcome the yearly pivot at $48,259, point 1. In (“Key Bitcoin Levels to Watch”) I warned that the completion of the continuation pattern in May, lines b and c, was likely to take prices much lower.

The weekly momentum, as expressed by the MACD-His, shows a pattern of higher lows, line e, which suggests that we could see a bottom later this year or in 2023. I would expect the yearly low at $17,600 to be violated or at least tested.

The yearly S1 support is at $7774 and I do not expect it to go that low but would not be surprised to see a decline to the $13,000-$15,000 area. Such as decline would probably drive the rest of the speculators out of the market. This is needed before a sustainable bottom could be formed.

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