The Bitcoin price advance is curving upward above $300 and 1900 CNY. The advance is so persistent that the technical indicators in the intra-day charts have become somewhat meaningless due to compounding divergence. Technical analysis considers the likelihood of a surprise reversal, as opposed to non-stop advance.
Bitcoin Price Analysis
Time of analysis: 18h34 UTC
Bitstamp 1-Day Chart
From the analysis pages of xbt.social, earlier today:
Taking a step back and looking at the larger 1-day timeframe we notice various interesting technical pointers in the chart. Customized xbt.social indicators indicate divergence with red and blue dots: stochastics in the top panel and MACD in the bottom panel. RSI (second from top) indicates “reverse” divergence with red and green dots.
Divergence, whether of the regular or reverse variety, typically warns that a reversal is due. Divergence can compound, so its not an absolute signal, but in combination divergence often heralds a reversal.
Both the stochastics (top) and MACD (bottom) are indicating divergence to the current daily price candle.
Significantly, the indicator divergence is forming as price approaches a significant target level across exchange charts. We watch with interest to see what happens at the $320 target. The reason the $320 level is a significant target is because it roughly correlates to the approaching 2000 CNY “psych” level in the BTC-China chart. It seems feasible that the market continues pushing price to $320 and 2000 CNY where we expect to see a reaction.
From the $320 (2000 CNY) potential reversal level, we may see a drop back to $300 or lower. This is one scenario indicated in the chart.
An alternate scenario considers the fact that divergence might compound, and not cause reversal, as the bullish fever increases and causes trend continuation to $340 or $360. Notice in the 1-day candle chart, above, that the purple 800-period moving average currently cuts through $375 and 2350 CNY, so it might be a strong attractor acting on price. This level is, incidentally, the top of Friday’s spike in the BTC-China chart that may have set the bar for this advancing wave.
Looking at the green 20-period moving average and the red 200-period moving average, readers familiar with these critical averages, will be aware that price periodically returns to the 1-day 200-period moving average. It may not do so in a day or a week, but it is xbt.social’s view that, during the early stages of advance, price is likely to return to the 200MA, sooner rather than later, before the more powerful third and fifth waves of advance can begin.
Taking small losses is part of the game. Taking large losses can take you out of the game. – Doug Kass
Two scenarios are outlined for the Bitcoin price chart. Technical analysis, based on simple divergence and the interplay of price with its moving averages, favors a halt to advance below $400. Other scenarios exist, most definitely, but those will come into focus once we observe the market’s reaction to $320 / 2000 CNY and $375 / 2350 CNY at the upper extreme.
Bitfinex orderbook depth and Buy/Sell Volume:
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Bitcoin price charts from TradingView.
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