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Technical analysts weighed in after bitcoin's latest price movements. (Photo illustration by ... [+] Chesnot/Getty Images)Getty Images
Bitcoin prices have been trading primarily between $30,000 and $42,000 since late May, but recently, they have repeatedly attempted to mount convincing breakouts.
In the last week, the cryptocurrency surpassed the upper limit of the aforementioned range multiple times, CoinDesk figures show.
It reached $42,351.93, $42,369.39 and $42,435.07 on July 30, July 31, and August 1, respectively, additional CoinDesk data reveals.
More recently, the digital asset has fallen back somewhat, declining to as little as $38,978.57 this morning, down roughly 8.1% from yesterday’s recent high.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Key Technical Levels
Keeping these latest developments in mind, several technical analysts weighed in, shedding some light on bitcoin’s crucial levels of support and resistance.
Katie Stockton, the founder and managing partner of Fairlead Strategies, LLC, offered some perspective:
“Bitcoin has broken through the resistance I have been highlighting defined by the cloud model, which lowers over time,” she stated.
“It previously was near $42K, but has since lowered to below $38K, such that a breakout has already been confirmed above cloud-based resistance.”
“A Fibonacci retracement level near $42.6K remains intact as resistance, however, so I would imagine some are focused on that,” Stockton added.
“Once that level is surmounted, the targeted level becomes $51.1K based on the Fibonacci levels,” she concluded.
William Noble, the chief technical analyst of research platform Token Metrics, also chimed in.
“Bitcoin is facing substantial resistance near $43k,” he stated, adding that this resistance is “clear on charts.”
Noble spoke to the recent pullback, describing bitcoin’s recent drop to roughly $39,000 as “an opportunity to get involved if you missed the rally.”
“The decline in bitcoin from $42k to $39k is likely a pause that refreshes,” he stated.
Mark Warner, head of trading at BCB Group, also offered a bullish take.
“There are many sellers at $42,000, where longs have been trapped since 19 May, so we expect more resistance at this level. A confirmation of the breakout, by BTC retesting $34,500-$36,000, could provide buying opportunities for those who missed out.”
While the aforementioned analysts focused on bitcoin’s resistance and potential buying opportunities, other market observers commented on how the digital currency could suffer further losses.
Julius de Kempenaer, senior technical analyst at StockCharts.com, spoke to this.
“BTC is still in its trading range and, as a matter of fact, BTC seems to be respecting the technical boundaries of that trading range ($30k-$42k) fairly well so far,” he said.
“Unless we see a clear break above that upper boundary, the risk now seems to be the downside again.”
Jason Lau, COO of cryptocurrency exchange Okcoin, also weighed in.
“Bitcoin's been stuck in this range for the past few months and resistance at the $42k level was expected,” he noted.
“Bitcoin last hit this range in mid June and fell 30% the following week,” Lau emphasized.
“Key metrics around BTC futures and premiums look similar to the last time,” he said.
“BTC futures open interest has rebounded in past few days, but at similar levels to mid June.”
“Since 7/31, BTC futures funding rates have turned positive, having been mostly negative for the past few weeks. Again, we are now at similar levels to mid June.”
“Looking ahead, we would need to see a clean price break above $42,000, along with a strong uptick in BTC futures funding rates, before we can confirm a breakout of the range,” said Lau.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.