Bitcoin Price Analysis: New Low on Low Volume Breeds Potential Bullish Set-up

Bitcoin sits precariously perched at the bottom of the annual market low and many bitcoin investors aren’t sure what to make of it. Although the market seems to be continuing its drift to new lows with greater and greater ease, there are a couple of bullish signals worth considering while the market continues to consolidate:

Figure 1: BTC-USD, Daily Candles, New Market Low

On Friday, June 29, 2018, for the first time this year, the daily candles closed below the annual low of $6,000s. However, something to note about this bearish close is the lack of volume and lack of momentum on the follow through. Overall, the volume is continuing to consolidate and it appears to be within the realm of an accumulation trading range (TR).

Typically, we would expect to see a stronger round of selling taking place with such a bearish close. But that isn’t what we see at all — we are actually seeing contracting volume as the market continues to push lower. This gives the bulls hope for a potential market move called a “spring”. A spring can occur in with an accumulation period and is often preceded by a “creek”. A creek is characterized by meandering, downward price action which decreases in volume as the market drifts effortlessly downward. On the tail-end of a creek, there is often a spring.

While there are many types of springs, the current one we are specifically considering has a low volume that pushes the price low, but which sees very little follow through and shows little signs of excess floating supply in the market. The market’s trend is most certainly down, but this spring scenario is still a possibility that we should consider.

If we manage to push to a new low and realize a continuation of the downtrend, we can expect to see a fairly violent move downward as we reach for support. The consequence of a parabolic move is that there are no proper support levels established because the price is rising so rapidly…

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