The 1-day Bitcoin price chart is looking more bullish every week, yet there are some immediate technical influences at smaller timeframes that are affecting price. Technical analysis looks at a bearish influence in the 4-hour chart that is presently pushing price down.
Bitcoin Price Analysis
Time of analysis: 05h38 UTC
Bitstamp 4-Hour Chart
From the analysis pages of xbt.social, earlier today:
The lower high in the middle of the chart had run to a natural conclusion in relation to price action off to the left of the chart (not shown). Price action then corrected downwards until reverse divergence halted decline – annotated in magenta.
Another advancing pushed to a new high and it, too, concluded as a result of indicator regular divergence to the immediately prior price high. Correction followed, and this is where we find ourselves in the chart today.
Looking at the MACD indicator (bottom panel), it is still above the previous low made on June 24. Conceivably, as price continues decline, MACD will descend to its June 24th low before price gets even close to its June 24th low at $239. If MACD descends to (or below) its trough low and price does not confirm by also reaching its low ($239), then we have an instance of reverse divergence. The same dynamic seems to be imminent in the RSI indicator too (panel second from top).
Reverse divergence, typically, has the effect of reversing price direction. When reverse divergence follows an instance of regular divergence – such as we have in this chart – then the effect is usually to push price to a new high. This is a high probability scenario for which we will use our MA trading method to find an entry into the new advance.
However, we should also consider the possibility of continued decline.
At the 1-day chart timeframe there is divergence evident in the RSI indicator. For the divergence at this larger timeframe to play out, it may push price into a decline that could retrace most of the past two weeks’ advance. This is only a probability, but one that we cannot ignore. xbt.social has identified the patterning of the Bitcoin chart’s new moving average signaling and we will take advantage of whichever direction the market pursues.
The sideways price action of the past 6-10 hours seems to be a result of reverse divergence to a subwave of the prior advance – annotated in cyan. Readers can verify the effect of this downside divergence in the 1-hour chart.
The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements. – Jesse Livermore
At the 1-day chart timeframe there is strong upside RSI divergence (regular variety) playing out with the effect of pushing price lower. As price approaches our target at the 1-hour chart’s 200MA ($250 – Bitstamp, 1550 CNY – BTC-China), we wait to see if price will maintain position above the 200MA or dip below. There is the possibility of a larger decline ensuing, or (staying above the 200MA in the coming days) that price may resume advance. We have to observe which way the market chooses in the coming days.
Bitfinex orderbook depth and Buy/Sell Volume:
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Bitcoin price charts from TradingView.
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