Bearish Divergence on Bitcoin
Bitcoin’s been on a monster run since the fall, but the recent price action may be showing signs of fatigue.
First, notice how BTC made a new high of $61,785 on March 13, combined with a lower high on MACD. This is a potential case of bearish divergence.
In isolation, bearish divergence isn’t all that meaningful because uptrends often battle falling MACD. But it is one sign of slowing momentum.
Second, notice how quickly price returned to its old range after breaking out. This is very different from earlier breakouts like October 21, December 16 and February 8.
Third, the breakout occurred at 5 a.m. ET on a Saturday morning. That suggests retail investors drove the action rather than institutions.
Finally, volume didn’t confirm the breakout. The previous new highs saw heavier volume, followed by lower-volume consolidation. This time, the bigger volume occurred early Monday morning as prices knifed back under $60,000.
BTC hasn’t given enough clearly bearish signs yet that would justify a “short” idea. However the bullish case may be fading – at least for now.
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First, notice how BTC made a new high of $61,785 on March 13, combined with a lower high on MACD. This is a potential case of bearish divergence.
In isolation, bearish divergence isn’t all that meaningful because uptrends often battle falling MACD. But it is one sign of slowing momentum.
Second, notice how quickly price returned to its old range after breaking out. This is very different from earlier breakouts like October 21, December 16 and February 8.
Third, the breakout occurred at 5 a.m. ET on a Saturday morning. That suggests retail investors drove the action rather than institutions.
Finally, volume didn’t confirm the breakout. The previous new highs saw heavier volume, followed by lower-volume consolidation. This time, the bigger volume occurred early Monday morning as prices knifed back under $60,000.
BTC hasn’t given enough clearly bearish signs yet that would justify a “short” idea. However the bullish case may be fading – at least for now.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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