Bitcoin Weekly: Will it Bounce?

Hopes are dreams for the bulls were crushed this weekend. BTC is testing support near the 6600 mark and things could get messy if we are to miss key lows. There wasn’t a major news catalyst that triggered the sell off this weekend. If there was one it hasn’t been announced just yet. What everyone is wondering about is the double bottom going to come in this week? If not we could be in for a considerably long bear market. 
This issue is all going to be about charts on multiple time frames to help us get an understanding of where we are. We will identify key levels to watch out for and potential areas where if you have missed strapping on some shorts could do so as well. 

Monthly BTC Overview

After the parabolic rise of 2017 BTC has been in a downtrend of lower lows on the monthly. May saw us edge a little higher however that was quickly stopped out with the bearish June we are witnessing. The key levels to watch out will be the 6k level that was tested back in February. If we break through that you could start hunting short setups according to your trading plan. With targets around the 4760 - 4350 area. That is where we see the next level of major support. If we break through that the next support levels are much lower. We will be reassessing the charts if the monthly candle closes below the the next support level.

Weekly BTC Overview

If we continue our analysis on the weekly chart we get to see the action with a little more detail. We can see that last year we saw the blow off stage take place from October - December. That party seems to have unwinding pretty much all of 2018 so far. Bitcoin has continue to make lower highs as it has stair stepped its way lower. The break this weekend of a key channel adds to the bearish sentiment. To add another indicator supporting the case of the next support around $4800 is a notch in the volume profile. These are usually filled and act like magnets. 
Lastly it is clearly visible that volume has been trailing off since the start of the year. We continue to put in lower volume bars and new money entering the space has steeply declined. For the bulls they definitely want to see an upturn on this weekly candle above the March low of $6415. 

Daily BTC Overview

On the daily chart we saw that the 30dMA at the 13EMA were major resistance points moving above the $7700 level. Price took a nose dive after that and we are coming into the previous lows of March. Since late Feb Bitcoin has been stuck in a very large trading range from $6500 to $10k. We came close to breaking it in early May but were not able to pull through. At the moment I would expect strong support on the daily at around $6500. If we are to hold there and consolidate that would help us to develop the double bottom for a bullish reversal. If not we will be testing the next level of support around $6000 and then there is a long way down after that. 
At the moment the bears are fully in control and any potential bounces back to the $7400 - $7600 level could provide lucrative shorting opportunities. This would only be the case if we see three independent reasons to take that trade. 

OKcoin Futures & Quarterly Contract

Futures on OKcoin are now trading below spot. They have been hovering at the base level for most of late May. This Friday on the 15th of June a major quarterly contract is expiring. This could cause for a lot of price manipulation near this time period. The exchange has a notorious reputation for a lot of price manipulation that takes place and in the twitterverse is often referred to OKcasino. Regardless this is something we need to keep track of near the end of the week. 
The CME exchange ended trading on Friday at $7665. We can expect a massive price gap downwards on the open on Monday. This would be another key aspect to keep an eye on. Whether they would accelerate the move down or move the price back up their exit price on Friday and then short it with the rest of the market. 

This is definitely a time where traders need to pay attention to the market. The first job of a trader is to preserve their capital. Trading with stop losses and hedging your portfolio is a key part of risk management. Without that blindly knife catching will end up blowing up your portfolio faster than you can imagine. Trade with a plan and respect your levels.

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