It seemed like Bitcoin had a rendezvous with its “flash crash” low.
It began to feel inevitable as the series of lower highs on the 30 minute chart persisted. There were short term bounces at what technicians would call appropriate support levels along the way, but they continued to fail.
Late yesterday afternoon a waterfall decline began that took the price of Bitcoin back to its low of the year. Earlier in the month it looked like a double bottom had formed at this $12,800 level, and there was a slight pause in the drop and some consolidation there. But a bear flag formed and the subsequent breakdown from that pattern propelled price back down to $11,181.
It was done.
There has been a sharp bounce back up to the $12,500 level followed by a higher low, but there is a large amount of technical work to be done if Bitcoin were to stabilize here and begin to reverse its downtrend. A break below the crash low brings into play levels of support that go back a long way and require the use of the daily chart.
Facebook (FB) opened in the regular trading session this morning by moving sharply lower. Shares began the day right about the same level they began trading at beginning of the year.
The reason for the drop in price was the company’s announcement of changes to its news-feed. These changes they say, are designed to encourage more meaningful personal interactions. Translation: fewer ads and more cat pictures from your second cousin. This attempt to encourage more meaningful social interaction between people was not appreciated by the machines that trade Facebook stock.
The gap lower this morning, broke through the rising 50 day moving average before finding support just above a horizontal trend line at the $177 level. The move was powered by a surge in negative volume. At this point in the trading day Facebook has recaptured its 50 day average and is near its highs.
It remains to be seen how this new strategy will affect the company’s bottom line, but the levels of support and resistance are well-defined on the daily chart.
Let’s see how those technical levels interact with the stock price.
The horizontal support line and the downtrend line we highlighted earlier today, continue to contain the price action on the 30 minute Bitcoin chart. (follow @rightviewrob on Twitter for updates)
As a result a declining triangle pattern has formed above the support line. Price range is compressing and periods of diminishing volatility like this, are often followed by volatile moves.
If this particular consolidation resolves with a breakout, then the pattern’s projected measured move would take the price of a Bitcoin back up to the $15,500 area.
On the other hand, if there is a triangle breakdown the downside measured move could potentially penetrate the “flash crash” low.
Many of the consumer staples sector stocks have not participated in the strength in the broader market this week. In fact, in today’s trading several moved below key levels of technical trend line support, closing near their lows of the session.
These well-defined early breakdowns offer good risk/reward entry points.
But short positions are particularly speculative and always require a disciplined trailing buy-to-cover stop.
It is always a great experience to work with Jim Cramer and his team on an “Off the Charts” segment of Mad Money. On last last night’s show the big three gaming stock, Activision Blizzard (ATVI), Take-Two Interactive (TTWO), and Electronic Arts (EA) were featured and it looks like they have much more upside in 2018.
Video game stocks have more room to run from CNBC.
Here’s the CNBC recap and the TheStreet.com recap.
Apple (AAPL) is having trouble breaking above the $176 level and as a result, it is the worst performer in the extended FAANG group (Facebook, Amazon, Apple, Netflix, and Alphabet) over the last thirty days.
While the other stocks in the acronym have moved above their November or December highs this month, Apple has remained locked in a horizontal channel pattern for the last two months.
Over the last two weeks, they moved higher along with their rising 50 day moving average, returning to the upper end of the sideways channel and closing a small downside gap.
While this is positive price action, the moving average convergence/divergence momentum oscillator has been in bearish divergence over the two month consolidation period. The Chaikin money flow indicator has been declining, confirming the underlying weakness in the stock price and suggesting that buyin interest is also waning.
The integrity of the very clearly defined zones of support and resistance (red areas on the chart) should determine the intermediate term direction of Apple stock.
Since its late December low, the rally in the price of Bitcoin has been impressive. It moved up from a nadir of nearly $12,000 to a recent high of $17,200. That’s a 43% rally which, of course in crypto-currency terms, is a mild bounce.
The run has seen a series of advances followed by periods of lateral channel consolidations. Despite the unusual percentage gain for such a short time, the moves higher and then the digestion of those gains is a normal and healthy procedure.
A very interesting development in this process has been the the fact that the support and resistance levels that the channel consolidation periods have defined, coordinate very well with the Fibonacci retracements levels measured off December’s historic high and its “flash crash” low. These retracement levels are based on the “golden ratio” and the famous Fibonacci number series, popular with Mother Nature and stock technicians and chartists.
The asterisks on the 30 minute Bitcoin chart mark the Fibonacci levels of the December range, and they also delineate the borders of the three major channel consolidations during the period. Also, the height of these individual channels has measured the move that followed that particular channel breakout.
A breakout from Bitcoin’s most recent horizontal channel consolidation projects a target price objective in the $18,000 area, and a return to the final Fibonacci retracement level. This was a key December support and resistance zone.
That level might well be a psychological barrier where, if penetrated, the attractive properties of an old all-time high and a large round number takes over. Then the well-defined Bitcoin advance may be replaced by more customary manic volatility.
Shares of McDonalds are up 50% over the last year. There are sound fundamental reasons for a rise in the stock price, from wider company profit margins to the change in the California marijuana laws. But McDonalds strong move in is in contradiction to millennial eating habits and the general public’s shift towards healthier lifestyle choices.
Nonetheless, the long term trend is higher.
Pullbacks and consolidations, of course, are a part of the trending process and it looks like McDonalds’ shares are preparing for a pause in their progression higher.
The first daily chart shows the steady advance in the stock price over the last 52 weeks. It has tracked from the lower left of the chart to the upper right, just above its rising 50 day moving average.
This month the trajectory of the rise has leveled off and Chaikin money flow has dropped into negative territory. Daily moving average convergence/divergence is overlaid on a weekly histogram of the momentum oscillator, and has made a bearish crossover on both timeframes. There has been this combination of moderating momentum and negative money flow in the past, and each time it has only signaled a small percentage pullback or short period of consolidation.
Taking a closer look at this chart, we can see that shares of McDonalds have been moving higher in a rising wedge or triangle pattern that began forming last October. The sideways consolidation, while still a lateral move, has broken the pattern uptrend line.
Also, this month a rudimentary head and shoulders pattern has formed on the daily chart. There have been similarly constructed consolidation formations as the stock has rallied higher, so it is way too early to suggest a top.
It simply looks like McDonalds’ shares are ready to consolidate gains and posiibly pullback modestly in the process. Watch the $171 neckline support level and the strength of the 50 day moving average, should it be tested.