Bitcoin price continues drawing sideways in a narrowing range. Will it return to decline?
Time of analysis: 15h30 UTC
From the analysis pages of xbt.social, earlier today:
The 1hr chart sell signal will be undeniable when the 20MA (green) crosses below the 200MA (dotted red).
1hr MACD (top) pushed to its upper Bollinger band earlier today, but the indicator’s compression continues and the signal we await will occur when price breaks to the downside and pulls MACD through its lower Bollinger band.
That today’s upside wave is now over, is implied by RSI reverse divergence (blue annotation) – price had made a lower high while RSI made a higher high in relation to the previous swing high.
As mentioned previously, there is a risk that price reverses at (or near) the support floor (blue horizontal line). We are taking an opportunistic bet that price will drop through the support floor and seek out $320 and 3100 CNY. While it is OK to take a bet on this outcome, it is advisable to not be too aggressive with your position sizing and to control risk in case of a strong reversal. Stick to a quarter position size until price crosses below local support and the chart confirms that price has more room to drop.
A test of the Fib line just below price (near $370 and 2530 CNY) should be the next market undertaking, and failure of this support should open up any remaining decline in the downtrend since December. If the market can hold the current price level and then advance to a new local high, we could see some light at the end of the tunnel, but there is not yet any evidence that a final low has been struck.
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Bitcoin price charts from TradingView.
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