Bitcoin trading achieved a decent rally during the past month and the overdue correction is still playing out. The large range of price movement has created a technical condition in the chart whereby price could drop to new lows, but just as easily resume advance without any technical hindrance.
Time of analysis: 14h23 UTC
From the analysis pages of xbt.social, earlier today:
Overnight (UTC), bitcoin price had declined below the anticipated support at 2600 CNY under a well-formed MA sell signal in the 15min chart.
At this timeframe (15min), the most significant MAs are now declining – an indication of short-term price decline – but the prospect of this being a quick correction prior to additional advance and resumption of the rally is not entirely off the cards.
Price failed to reach the dashed grey support & resistance level and Fib line overlap at 2290 CNY. The stochastics (second from top) are downside flashing divergence (blue dot), and the stochs have, in fact, already begun rising while price was making a new low – a reversal signal that is still pushing price to the upside.
What is interesting about today’s push higher is that it caused another instance of reverse divergence in the momentum indicators. The blue annotations show price making lower highs while MACD (top) and RSI (third from the top) make successive higher highs. In the process the indicators have reverse diverged to all but their value at the top of the rally high, and this clears a path of advance for price. Similarly, RSI had cleared a path of decline on the first wave from the top – meaning price could eventually target the 1day 20MA – currently at 2100 CNY near the lower dashed grey horizontal support & resistance level.
The market could take price either way – there is no technical hindrance to advance or decline – so, best to wait for a confirmation of trend before taking position, especially, so soon after the massive blow-out on Wednesday.
Be aggressive in a trending market and conservative in a choppy market. – Vadym Graifer
Unless a strong force can turn this around and push price to a new high, it seems that price has fallen back into medium-term decline – the first confirmation of decline will come when price trades below the 1day 20MA. That will be a signal to go short for the longer term. In the meantime, if price fails to return to support at 2300 CNY and pushes above 2800 CNY (thereby getting back above the 1-hour moving averages), rapid advance may erupt.
Bitfinex orderbook depth and Buy/Sell Volume:
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Bitcoin price charts from TradingView.
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