BTC price at press time: US$243.25
The midweek price alert began with: “Bitcoin has finally broken above the noted 50-day Exponential Moving Average (EMA) at US$232 and done so with force. It now also sits above the 100 day EMA (~US$242) as well. It’s possible a change of trend could be underway, but it is still too early to tell. This move has been made on very small volume and On Balance Volume confirms this. If the trend is truly going to change, volume should ideally come in.”
The price reached a high of ~$256 and has now come down to ~US$243 and thus far the price has been consolidating above these two moving averages, which is positive, and something we haven’t seen in quite a while. It’s been over a week and price continues to look for support here. In the past, there have been quite a few whipsaws in this area which led to breakdowns below the 50-day MA.
Thus far things seem different. The one thing that continues to make me weary is the lack of volume. If we are going to have a truly sustainable advance, volume needs to pick up and price needs to burst through big resistance at the 200-day Moving Average at ~$258. As long as price remains above the 50-day, a neutral to bullish stance should be taken.
The bitcoin price now sits above its 50 & 100 day Moving Averages after breaking above these two resistance lines last week. As has been the case for a long while, the 200-day lies on top of the 100-day, which lies on top of the 50-day. This is typical of a long bear market in price. One would want to see crossovers in these lines begin to occur if the price is truly going to come out of the bear. Breaking above the 200-day MA at ~US$258 with a surge in volume would also be a great sign.
The Money Flow Index (MFI) and the Relative Strength Index (RSI) have both moved into bullish territory and look to be consolidating below overbought conditions. This is a confirmation of the rise in price. As mentioned above, price rose to ~US$256, but it is now in the process of looking for support at its MAs. On Balance Volume continues to be at low levels and the volume on the breakout attempt has been at low levels. This continues to be a concern and ideally will need to be resolved.
The 1-year Ichimoku (cloud chart) has broken above the cloud and is consolidating above it. While this is positive, it’s not a cause for celebration, as the chart has labeled we had two long-term breakouts that turned into fakeouts. Ichimoku is a trending indicator, so the longer we stay above the cloud, the more likely the trend is changing. The Tanken Sen has made a positive crossover of the Kijun Sen and now is in the cloud. This is bullish as well.
Support is now at ~US$236, as that is the top of the cloud below. Resistance continues to be in the ~US$255–~US$260 area. The cloud ahead has made a bullish crossover, but remains quite compressed. A widening of the cloud would be bullish for the price.
Price has been in a long consolidation pattern since March and has really moved nowhere in this entire period. Now would be a time for a breakout of this range, if ever.
For further definitions of what is being discussed, please refer to this previous post on Ichimoku cloud charts.
The bitcoin price has reclaimed two resistance areas, and now old resistance becomes support. Fibonacci retracements have been drawn from two price tops: the mid-November high of ~US$424 and the mid-March high of ~US$298.
To the upside, a break above ~US$255 and ~US$264 (which almost coincides with the SMA and EMA 200-days) needs to be broken for a more bullish picture to emerge. This could pave the way for ~US$276 and ~US$295. The Fibonacci Line drawn from the November high confirms that ~US$265 is key for a bull run.
On the downside, price needs to hold ~US$234 and ~US$230 to remain in a neutral position within a consolidation. If these don’t hold, it will be time to reassess the trend that is forming. The next week should be critical for price and give a better picture to the direction.
MACD (moving average convergence/divergence) is finally slightly above the zero line and is in a bullish position. Momentum has been hard to sustain and this is normal as price is trying to get comfortable at its new support levels. The RSI is bullish here as well, as mentioned above.
Included is 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.
Buying Pressure has crossed over the ADX and has returned, while Selling Pressure has fallen since last week. Bulls appear in control right now. The ADX line remains above both the Buying Pressure Line and the Selling Pressure Line, but at higher levels than last week. This puts it on a buy signal.
The Bollinger Bands have widened with the surge and price, as volatility has somewhat returned to the bitcoin price. This confirms the price action and means we should expect some swings in price and more price action. From the present price of ~US$243, the price has room for retest resistance above at ~US$255–~US$260.
Since the high of ~US$256, price has been consolidating and the indicators went from overbought and have corrected to a more bullish stance short term. This goes for both the MFI and RSI. The MACD remains in a short-term bearish position. Downside support is ~US$241, ~US$238, and ~US$234. In the short term, I would expect the price to test lower support and/or try to make a move for old resistance at ~200 day. The price is in a more neutral position.
The price action has become very constructive and is holding above the 50 & 100 day. Old resistance now becomes support and the indicators have shifted into a more bullish position. The price tested the 100 day at ~US$241 and has held for now.
This is a positive start to what could possibly be and is looking like a change in trend. Without volume coming in, be suspicious and remain cautious until a more bullish picture emerges.
Any pullbacks should be a buying opportunity as long as ~US$230 holds. However, we remain waiting for a break above the 200-day with volume to confirm that the bear market has ended.