BTC is showing a bearish divergence on the daily (and weekly) charts. Coupled with declining volume and a head and shoulders pattern at the all time high, Bulkowski's Encyclopedia of Chart Patterns this a 92% probability of reversing here and correcting to the low $50k / $40k range.
Note
The weekly is about to close in a few hours and here's a few things to note:
1. The bearish divergence (higher price peaks while RSI peaks lower at the same time) is as valid on the weekly as it is on the daily.
2. Weekly volume is declining as price rises. To me that's a signal that bulls are running out of steam.
3. While the H&S on the daily isn't visible on the weekly, one could argue that the weekly chart is showing one large pole on a bull flag. Flags have throwbacks/corrections and while this bullish trend is very much intact it's perfectly normal for price to correct before moving to the next level.
4. The weekly RSI has been oversold for almost half a year. That's insane, no other way to put it. Price needs to correct and the RSI need to drop below 70 before new long setups are taken.
BTC could continue up and test the 3.618 Fib at $64,256 (perhaps spike even higher to as much as $70k) however it's likely that in the short to mid term price is headed for a correction to the 2.618 Fib ($47,275) and possibly below to the support trendline in the high 30k/low 40k range.
On the shorter time frames BTC looks like it set a pretty good bull trap and if price drops to $58k or anywhere near it before the weekly candle closes we could see BTC drop sooner rather than later.
Trade active
BTC price hit higher peak while RSI peak is lower and in line with the down trend line. BTC is heading for a correction soon.
Trade closed: target reached
BTC broke through the daily 50MA and reversed off of the Fib support ($51,938). Stay tuned to see if BTC dead cat bounces under $50k or continues the uptrend.Trade active
Price could never close above the daily 50MA and in doing so BTC formed a bear flag with the Fib acting as support. Today the Fib support was pierced and I anticipate that price will drop to the 47k support (other chart) and as low as the base trend line support (also other chart).
Note
Here's the other chart showing the 47k Fib and base trend line support. Note that the RSI hasn't crossed into oversold territory (30) on the daily so that indicates that price has further to go before any reversal is to be considered.
Trade closed: target reached
Price reached target at Fib support. Note the death cross of the 50MA dropping below the 200MA on this 4 hour chart. Price will recover here but it's possible for BTC drop to the teal trend line support in the high 30k / low 40k range in the coming weeks.
Trade closed: target reached
BTC just hit trendline support to reach the target. From here if BTC breaks below this trendline expect more bearish activity.
Note
Price has hit RSI downtrend resistance and the daily 50MA is likely to cross below the daily 200MA aka the Death Cross. BTC has formed a bear flag since dropping below the teal trend line support and has yet to close above the 200MA since forming this flag. In the last 4 years the BTC death cross of the daily 50MA and 200MA led to a drop of at least 30% within 30-45 days of the cross. In one instance price spiked above both the 50MA and 200MA before crashing down and in the other instances price simply dropped 30%. If history were to repeat itself BTC will simply drop at least 30% in the coming weeks. If price were to spike above the MAs it might retest the high 40k, low 50k resistances however that's an incredible gamble that I wouldn't take. For now it's still best to wait and see.
Trade active
Add the daily MACD crossover in addition to all the other bearish signs. Unless BTC magically spikes here and continues an uptrend to negate the MACD crossover, BTC is very likely to continue dropping in the coming weeks.
Note
BTC price is finding strong support on the weekly 50MA. However, it struggles to stay above the 4h 50MA and has yet to test the daily 50MA. The negative news has been ignored / put on the back burner and rumors of Apple buying a significant amount of Bitcoin and hiring "alternative currency" specialists are hinting that they may accept cryptocurrency as payment in the future. It's purely speculation at this point but if true could be the spark needed to ignite a move up to the next level of resistance.
What I see here is a classic example of BTC trading sideways between significant supports and resistances. When BTC breaks above or below they'll be some "major" news item to go along with it to justify the move up or down. For now patience is key. If BTC breaks above the daily 50MA there will be a bunch of sidelined money entering and will propel BTC upwards. On the other hand if BTC breaks below the weekly 50MA all the traders who were positioned for upward movement will sell off and trigger stop losses driving the price into the low 20k / high teens price range. It's possible alts may see this sideways movement as a chance to recover but that's a risky proposition because if BTC drops below the weekly 50MA and finds support at that high teen / low 20k support, alts will likely drop 35-60% from here which is why it's best to wait.
Lastly, the daily/weekly 50MA pink horizontal lines show the current price of the MA so be mindful that BTC has yet to retest the daily 50MA since the death cross a few weeks ago.
Note
Apparently Tradingview won't let me post screenshots of my charts so you're just going to have to take my words for it.BTC broke through key resistances: the 4h 50MA, weekly 50MA, daily 50MA and a downtrend resistance line from the ATH. Now BTC appears to be getting rejected at the daily 200MA and the cross sectional resistance (green dashed line).
I would anticipate that BTC throws back to the ATH resistance trendline now turned support. If that breaks the MA resistances should turn support.
Note
The weekly candle closed forming 3 white soldiers so while BTC is currently retracing off of the daily 200MA the general movement from here is up. Considering that for the last few months BTC has been consolidating above the weekly 50MA, reversed off of it and in the last 3 weeks have posted consistent double digit gains I would target the next resistance at $50k in the coming weeks.Note
BTC couldn't stay above the cross sectional resistance, daily 200MA and the $47k fib so it's looking like it's going to throw back to the down trend resistance line turned support / daily 50MA. Approximately the $36-39k area.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.