Bitcoin trading joined gold, today, when it halted advance and tipped into correction. Although not a trading recommendation, just yet, technical indications imply a return to at least the January lows.
Bitcoin Price and Trading Analysis
Time of analysis: 14h00 UTC
OKCoin BTC/USD Spot 1-Hour Chart
From the analysis pages of xbt.social, earlier today:
Yesterday’s contradictory signals eventually folded to the side of the bulls as they pushed the advance $10 higher. In the process the state of the momentum indicators had become further diverged from price:
1) 1hr RSI (panel immediately above price) diverged to the two most recent price highs
2) The stochastic indicators (above RSI) also diverged and returned to their lower extreme
3) MACD (second from top) shows even momentum with compounding divergence (red dots)
4) Average True Range (ATR, top) is slowly increasing but the range of price movement during the advancing wave has been small – implying a small degree of trend and even momentum.
The sense is that the current move higher is mere emulation of the gold chart.
The bitcoin price move began after gold breached its long-term upper resistance channel last week, and now that gold is correcting strongly from its $1,260 high, the steady bitcoin advance (as evidenced by the momentum indicators, above) also enters correction.
That speculation moves price is a given fact, but seeing unashamed imitation in the chart is disappointing. That said, an imitation price rally is preferred to an immitation Bitcoin. Despite fundamental threats to Bitcoin’s security and value, it is encouraging that the market can still speculate price higher, in spite of Unlimited imitation Classic(TM) XT!
Technical and fundamental considerations bias the outlook to the downside. Even if this analysis is invalidated by price continuing advance to all-time highs, a price correction is due.
Gold has made several $20 and $40 corrections during its rally of the past two months – the kind of corrections that makes Bitcoin notorious for its volatility – and that we have not seen in the chart during the past week.
This last fact strengthens the view that the current advance is unfolding at a small wave degree and lacks both conviction and participation. The price action subsequent to a pullback will confirm either correction or reversal, and help us assess the direction of larger trend.
Bitfinex Depth Chart and Buy/Sell Volume
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Bitcoin price charts from TradingView.
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