he Bitcoin price continues to be range-bound. This appears to be looking like the top of that range. Last week the price was ~$225 USD as of this writing and now its at $234 USD. It has attempted a few times to get above $240 USD, which is proving to be major resistance. This is where the 50-day exponential moving average (insert link) now lies. In the last few days price has tried to stay above this level and hasn’t been able to.
As has been mentioned in previous articles the slope of all the EMAs (50, 100, and 200) has turned downward and this is starting to prove problematic. The price is having trouble holding above these lines. The best case scenario would be to see a flattening out of the moving averages as a sign of improvement, this has not happened thus far.
While many indicators have moved into neutral territory this move appears to be topping out as volume and momentum have not followed the price higher and many of the indicators appear to be topping out.
While there have been some improvements in price short term, nothing has changed as far as the long-term trend goes. If the price were to break through 240 and continue higher 250-255 would be the top. The weight of the evidence says this move should not be trusted and is nothing more than a counter trend rally.
The 1-year chart (long term) of Bitcoin remains bearish. The price continues to decline, and remains below all 3 of its Exponential Moving Averages (EMAs). The 50-day EMA is proving to be a major resistance area and right now, that is approximately at ~US$241. The price has not been able to stay above it in recent days.
As mentioned above, the slopes of all 3 EMA’s are bending downwards as well. This is symptomatic of falling prices that are not ready to rise and if they can continue to slope downwards, the price will follow, which can lead to an accelerated downtrend.
The Money Flow Index (MFI) and the Relative Strength Index (RSI) both are following the same pattern they have risen to neutral levels and have now flattened out and are looking like they are beginning to turn downwards. Simply put, momentum is beginning to wane and this move doesn’t seem to appear to have much more strength in it. Also note that the MACD has been below zero for this entire move and has essentially remained flat. These are not signs of a trend change.
Not much has changed in the Ichimoku charts. The 1-year Ichimoku (cloud charts) continues confirming this bearish scenario.
The price is below the cloud, which is bearish. The cloud is major resistance and it confirms the ~$255 USD area as the potential upper top of this move if price were to get there.
What continues to be disturbing is the cloud in front of the price, which is 26 days ahead in the future. It is future resistance and it is at ~US$228. This is below the current price which means something has to give and in this case it looks like the price will conform to this move and head lower. That cloud had a bearish crossover a couple of weeks ago and continues to predict lower prices in the future. The cloud continues to descend providing additional pressure on the price.
Aside from the price below the cloud, the Chikou Span (Lagging Line) is below the cloud, along with the Tankan Sen (Conversion Line) and the Kijun Sen (Base Line), which are sloped downward but are flattening now. It appears they too are topping out in this current rally.
Meanwhile, nothing in the Ichimoku chart shows signs of an imminent reversal. For further definitions of what is being discussed, please refer to this previous post on Ichimoku cloud charts.
Using Fibonacci retracements from an intermediate-term price high of US$427 recorded in mid-November, we see that the price is above .236 support at ~USD $231. If it breaks below this, the downside scenarios mentioned below would take place. As of this writing price is ~$234 USD. Having failed to break above resistance and hold $240 USD a test of$231 is likely.
The US$210 level continues to be major support and should be retested. The RSI and MACD are both flat and appear to be topping out. This shows momentum is stalling.
I have also added the Directional Movement Index (DMI), which looks at buying and selling pressures. The blue line indicates buying pressure, the red line indicates selling pressure and the orange line is the ADX, which indicates the strength or weakness of a trend.
As one can see, selling pressure has fallen as has the ADX line. This indicates selling pressure has receded in the most recent week. The Blue Line (buying pressure) has crossed over selling pressure, which is indicative of a move higher in price. This is all happening at a low level in the index which means volume and momentum are not confirming the higher move to the top of the range in price. This index has turned positive but at very low levels. Simply put this means this indicator should be watched but not used as a signal.
Looking at the short-term trend (May 4 price high of ~$241 USD) using Fibonacci retracements, the short-term price trend looks to have topped out at~$241 USD which again happens to coincide with the 50 day EMA.
Short term $235 and $231 are both support areas which look likely to be tested. If these should break down $228, $225 and $221 come into play. The RSI and MACD are both showing that ~$241 looks like it was the top as they have both headed downward.
The ~210 area should provide support if price breaks below the targeted areas mentioned above.
The primary downtrend continues. While prices have moved higher, it appears to be the top of the range and most indicators are confirming this. Momentum and volume have not followed the price higher. The 50-day EMA looks to be fairly big resistance as the price has failed to stay above it. If the price does move higher, be suspicious. It still looks like there are lower levels to be tested. Every rally in price in recent months has been at lower levels and this is a concern as well. A retest of the ~$210 area looks like a real possibility.