In amazingly bullish style, bitcoin has bounced significantly back up in price on the 4 hour chart, with the 200 MA holding as support, as it has done since October. The power of bitcoin during its bull trend has been phenomenal. Just when you think it’s dipping, and the retrace is in, suddenly the bulls jump in and price breaks back to the upside.
On the 4 hour chart we can see how price broke right back up above all the MAs. Even the RSI is showing clear bullish momentum. However, volume is minimal. Even on the daily chart, which carries more weight, being a bigger time frame, we can see price has closed yesterday’s candle above all the MA lines.
Price is back up above the 10 daily MA and superficially this appears bullish, as if the gravity of the moon is pulling it still further upward. However, if we look at the daily more deeply, we can see that price is still making lower highs and lower lows, in a downward channel.
That said, price is at the top of this channel now and could break out to the upside at any moment. Also volume on the daily as well as 4 hour chart, is dropping, or on average staying even, with no significant increase. We need to see a distinct increase in volume to accompany a breakout, for it to be legitimate or sustainable.
Add to that the fact that we have on the daily RSI a similar pattern of lower lows, and overall it appears that this current attempt to the upside is weak and not convincing. Naturally on weekends, like now, volume is lower, though price can still go either way.
One bullish indicator on the daily RSI, is the fact that the 50 level held as support, with a clear bounce back up. This is clearly bullish territory still. However, the RSI appears to be in a bearish divergence, making lower lows, while price prints higher lows. To me signals still appear mixed. As a result I am observing and waiting for the retrace to take price to new lower lows.
The 50 MA on the daily is naturally rising by the day and is now at $16.8k. This would be a natural support for the next dip, if it should occur. Another reason that I am still expecting some further downside movement in price, is to be found on the weekly chart. Here we can see that price is way overextended above the 10 MA, which is at around $16k. In fact in a bull market, price can even fall to the 20 weekly MA to find support, and still be considered bullish. As long as the 20 weekly holds as support, the bullish trend is still in play.
In other words price can still dip to around $14k – which is a previous resistance and local high – and be above the 20 weekly. This is apparently the most crucial line of support in a bull trend, like our current one. Also the RSI on the weekly is massively overbought, above the 70 mark, since Q3 in October. And the RSI is curling over to the downside.
So overall, BTC price looks bullish in the short term once more, but overbought with plenty of room to the downside, without breaking the long term bull trend. And it’s just a matter of time before price does inevitably break down to retest the 20 weekly MA. The more we have to wait for that, then the more the 20 MA rises. At some point price will dip to meet the rising 20 MA on the weekly, which by then may be above $14k.
For now we simply need to allow time to let this move play out. Price has been trading sideways for the past three weeks, and a dip further down would not be unusual. What would be unusual is if price breaks upward to a new ATH and smashes the $20k glass ceiling. A dip now would be the long term healthier movement, after the past months of parabolic uptrend. Let’s watch and see how it plays out.
This is not investment advice and merely my personal opinion as an amateur, self-taught trader and crypto enthusiast. Knowing the theory and being able to apply it correctly on the day, are two different things.
