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Bitcoin price has settled down, relatively speaking, since the sharp sell-off from the 13-Apr high when it was trading above $60000.00. In recent notes, we have evaluated trend conditions in BTC using the Hurst cycle approach. In this overview, we will apply pattern and moving average analysis to assess the current trend structure.
- BTC sold off from around $64970 to $30010 between Apr - May, a 53.81% depreciation.
- This represents the first meaningful reversal of the runaway uptrend that started mid-Mar 2020. The reversal has thus far retraced almost 61.8% of the Mar 2020 - Apr 2021 rally.
- One key trend identifier we monitor is the slope of a moving average study. This approach uses a 50-day exponential moving average (EMA). A second average is calculated, a 5-period EMA of the 50-day EMA and the position of the two averages determines the slope.
- The chart clearly shows how the EMA slope shifted to positive in May 2020 and when it reversed last month.
- A positive sloping EMA condition suggests the trend is up and the reverse is true for a downtrend. The current slope condition is negative and this suggests the trend remains down.
- Since the May 19 low, price appears to be trading within a triangular formation. A triangle is a continuation pattern and if correct, suggests the recent sharp sell-off, even if it does represent a correction, has more ground to cover. A pattern breakout to the downside would confirm a resumption of weakness.
- The technical studies suggest BTC remains bearish and has the potential to test the 61.8% retracement of the Mar 2020 - Apr 2021 rally at $27167.00. A break of the $30000.00 level would strengthen the bearish case.
- In terms of resistance, the first major point of reference is at the $46188.00 level. This is resistance highlighted by the EMA study.