BTC in a Precarious Position

Last Tuesday is also when the death cross between the 50- and 100-day moving average occurred, providing the technical data for the selloff. Fundamentally most analysts are blaming the crackdown in China for this recent selloff.

As of 4:30 PM Eastern daylight Time, BTC futures are trading down by 8%, now fixed at $32,445. This most recent move took us below the 200-day moving average, which had acted as support for the past few weeks. Pricing must hold above the 61.8% Fibonacci retracement level occurring at $30,798 if it is to remain in the $30,000 price range. A break below this level could signal a further selloff taking prices as low as $20,000. The 61.8% retracement level has acted as support twice in the past two months and has served as a base for prices to move higher; this support is crucial for the near-term path of BTC futures.

Another technical note is that last week’s action has cemented a head and shoulders pattern on a daily chart of BTC futures. This pattern usually identifies a trend reversal from bullish to bearish, which is precisely what we have been talking about over the past couple of weeks. This pattern is one of the most reliable patterns for predicting trend reversals and is signaling concurrently with the death cross that we will return to $20,000 pricing.