Bitcoin Technical Analysis: Price, Support Level, News | Crypto Markets

Hi, I'm Giovanni and in today's crypto markets video we are Talking to Dan McDermott from TheChartGuys.com who is going to give his opinion on the markets and do some technical analysis for Bitcoin and several altcoins. Dan, could you please introduce yourself?

Sure. My name is Dan McDermott. I work for and founded TheChartGuys.com with my business partner. We are technical analysts trading all markets from commodities, regular old stock market. We jumped into the cryptocurrency space two years ago when the hype took off and started to cover this space and have a lot of interest in this space due to the opportunity. And we've been very pleased with how technical analysis has been applied to this space and has worked really well since I started trading it in the summer of 2017.

Great. So what happened to Bitcoin this week? Can you give us a brief overview of the latest movements?

Sure. Well, we just had some very significant action just yesterday where we had news come out which is causing a little bit of fear in the market marketplace. We've got news about Bitfinex and Tether and potentially funds that are missing or held up. And it really just was a wake up to the market that caused a lot of selling pressure. But honestly, what is standing out to me is the resiliency of the bulls to be able to hold the $5,000 price level at this point in the face of that weakness.

How do you think this tether Bitfinex allegation impacted the market?

Well, it's definitely, it's for personally, for me, I have always stayed away from Bitfinex because I don't fully understand Tether and that's as simply and as honestly as I can put it. So because of that, I've stayed away from it and I've dealt with exchanges like Coinbase that allow me to trade in US dollars and that just makes me more comfortable as a trader because we have so much risk trading these cryptocurrencies that that's only an additional risk that I try and mitigate for myself personally. But it seems that, you know, other people are getting a bit of a wake up call. People are transferring their funds off of Bitfinex. The last thing people want to see is another, you know, Quadriga situation or something where their funds are going to be compromised. So it's the kind of scenario where we're seeing the market respond to this bearish news. But again, it's almost like we've seen the bulls strong with the price movement from the 3000s to the 5000s over the last couple of weeks. And I think that what we see, how we see the market respond to this negative news is going to be very telling for us because I think a lot of people are going to say, wow, well, if with that much bearish news, if we're still holding $5,000, maybe the bottom is in for Bitcoin and maybe a bullish run can get going now. So I think that if we are able to hold strong in the face of this reaction over the next few days, as the news continues to get digested and we get more and more facts, I think that it could be perceived as a bullish hold of support.

That's very interesting. So talking about like technical indicators, what are the main indicators we should look at to interpret the market right now?

Well, for me, it's always volume is a very important one. And you have to ensure that you're not just looking at the volume on one exchange. We want to know what the volume is of the entire cryptocurrency ecosystem. That tells us, you know, what's going on in terms of how much buying pressure there is. We also have to be cautious of the fact that some exchanges have been accused of doing wash trading, which is creating false volume of trading back and forth with themselves. So we look at volume, we look at rsi. RSI lets us know when things are getting extreme, whether it's getting extreme with selling pressure or getting extreme with FOMO and buying pressure. And another one that I use is exponential moving average, the 12 and 26 period. And that's something that as I've been a trader for seven or eight years before I even touched cryptocurrency. And that was new to me in the cryptocurrency space. I watched how the price was reacting to those exponential moving averages. And it was very notable for me how they were able to hold as support and resistances and be good guides, just as good visual indications to be watching for whether or not the bulls are able to get over those resistance levels and prove some strength to us, or whether or not the bulls are able to hold those support levels. And I'll show you just an example here real quick where the exponential 12 period support on Bitcoin has been holding really well over the last couple of days. And trying to share my screen. Here we go. So here on the daily time frame, this is the daily chart where every single candlestick represents one trading day worth of action. And we can see this 12 period exponential moving average has Held as support test after test after test. And that's now finally been lost on this news. We closed below it. So I was. Over the past two weeks, it was very easy for me to say, I am bullish on bitcoin as long as this support keeps holding, because the support is trending up. Of course, if we are bullish, we want to see the price trending up as well. But now that that support has been lost, it's almost like we put on the brakes as bulls and say, okay, we need to be a little bit cautious. Now. The bears have made a statement, and now we have to see how do the bulls respond to this. Are we going to be able to hold on or are we going to break the low of consolidation? And right now, 4900 is the most important support level for me, and that is the low of that consolidation from the initial bull move. So if 4900 can hold in the midst of all this bearish action, I am going to be bullish. The fact that bitcoin was able to hold that level.

Thanks a lot. I wanted to ask you one more question about something that Eric voorhees said, the CEO of ShapeShift. So the number of daily confirmed bitcoin transactions, apparently, according to him, is the most important indicator, the most relevant metric in the cryptocurrency market. Do you agree with that?

Well, I can come from, as a trader perspective, I would say no. I would say price is always the most important thing. Truth in the market is what the price is right now, in this moment. That's the way that I view markets. That being said, it's absolutely an important indicator because from a fundamental perspective, you know, if we're seeing more and more activity in the cryptocurrency space and we're seeing more and more adoption, then in the end, in the long run, that's only going to help the price go up. So it's a very important indicator to be keeping an eye on. But it's entirely possible that the price of bitcoin goes down while the number of transactions are going up. So for me, it's always the price level as the most important thing that we're watching. But the transaction number definitely worth keeping an eye on. And it's just a difference between whether you're a technical trader or a fundamental perspective. And in my opinion, having some combination of both styles is the ideal way to be a trader.

Okay, then. So I would like to ask you, can we see some indicators from the charts which make us guess what will be the price of bitcoin in the next few weeks or what will be the movements of the main cryptocurrencies in the next few weeks.

Sure. So one thing as a technical analyst that I want to distinguish with, I don't do predicting, but I can look at what's the most likely scenario. So I can't look at a chart and say this is what the price is going to be. And the technical analysts that do that are kidding themselves to think that they're able to predict what's going to happen. So what we do is we react, we react to key changes in the chart and that tells us what's going to happen in the near term. So just looking at this daily chart, I can say that if 4900 breaks, we're going to see weekly consolidation very likely over the next couple of weeks. And that would be on the weekly timeframe. Here again, where every candlestick is now representing one week. The most important technical change that has happened is the change from a downtrend to an uptrend on the weekly timeframe from the all time high. We were in a weekly downtrend for month after month after month. And recently in the past few months we have changed that trend with a higher low and a higher high. That's a trend change. So if we break 4900, the most important short term support level, for me, that tells me this weekly chart needs to pull back and form a new support level which will still maintain the higher low uptrend compared to 3,337. And it's no red flag if we keep the weekly higher low pattern intact. So I can say that if we break 4900 weekly consolidation is going to occur. That's going to be normal and healthy unless we see significant bearish volume associated with that pullback. And we're going to be looking for bitcoin to maintain this weekly uptrend over the next couple of months unless we see some. And again, it's really a news reaction that it would take to derail the bulls at this point. And the fact that that is not happening on this news reaction gives me confidence that this weekly uptrend can remain intact. And we're going to have a very key battle of 6000 resistance because we had a ton of price action in the 6,000 range back in the summer and now that previous support is going to act as resistance on the way back. And I know that from talking to a lot of traders on the social media universe that all eyes are watching the $6,000 level. And there's a lot of people that still think bitcoin needs to drop to a lower low. And I ask them, you know, what would it take for you to change your perspective? And most of them say, if we were able to get over the $6,000 level and turn that into support, I would feel that the bitcoin bottom is in. So that is an important psychological level that we're going to be watching as well.

Do you have any comments about specific altcoins like the. Are there some specific altcoins which performed in a curious way or in a particular way?

So the altcoins that I focus on the most are Ethereum and Litecoin. And that's just because trading on Coinbase, those are the best for liquidity, the best trading opportunity. And they're doing some very different things just with how they are set up. So Ethereum over the past few weeks have shown us it is clearly weaker than Bitcoin. We have a very significant pullback from the top of the move that we saw and it's shifting to show me that Ethereum is more bearish relative to Bitcoin and Litecoin is a bit more bullish relative to Bitcoin. So this is Litecoin's weekly chart. Litecoin changed its weekly trend before bitcoin did the percentage move from the low. At this point we made it all the way up 350% from the low to the high. So that's a very significant bull move and it gives the bulls a lot of space to be able to maintain their uptrend with higher lows and higher highs. And if we look at the Ethereum bounce on the weekly time frame from the low to the high, we went from about $80 and we made it up to the $100 range or the $180 range. But that was only about 130% move. So Litecoin saw significantly more upside and a lot of people attribute that. And again, knowing some of the fundamentals helps, but the litecoin having event that's going to be upcoming, that is a reason that a lot of people perhaps are going to be a bit more bullish on Litecoin and than on Ethereum. So comparative to Bitcoin right now, if I had to rank them, it's bitcoin as the main indicator that we're watching for clues. But Ethereum is showing weakness and Litecoin is showing strength relative to Bitcoin longer term.

We were here with Dan from thechatguys.com.

Thanks for having me on, Giovanni. It was nice talking with you and I'll see you next time.

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