Bitcoin (BTC): Breakout or Breakdown Ahead? Price Analysis
Bitcoin (BTC) is currently at around $114,000 after a big dip down to a local low of $112,000. Was that the time to buy the dip, or is there more trouble ahead?
Calling a market top
It can be argued that as long as the US stock market is going up Bitcoin will continue to rise as well. The only issues along the way are that various economic shocks happen, the stock market takes a hit, and Bitcoin steps on a banana skin that gets everyone predicting that the end of the bull run is nigh.
Economic analysts as well as Bitcoin analysts come up with theses and charts that prove that on one hand we are entering what could be a depression, and on the other hand that Bitcoin is already declining into its next bear market.
The reality is of course that no one knows. Calling a market top is akin to guessing the name of the bear at the school fete. Yes, there are good analysts out there, but all they can really do is look at the probabilities and then try to make an educated guess.
Investors who are looking to start selling their positions might have their heads in a complete spin if they listen to this and that ‘expert’ on social media. Wildly differing opinions are claimed, and often with bags of conviction. Who should they listen to?
The only thing that isn’t in doubt is that both the US stock market and Bitcoin are in uptrends. The old adage of “The trend is your friend until the end” still applies.
If you are looking to trade Bitcoin by trying to guess and sell the market top, you are either in the 1% of highest performing traders, or you will be just extremely lucky.
Finally, one has to consider this. When you sell your Bitcoin, you are in fact buying dollars (or another fiat currency) with it. You are swapping the soundest and scarcest form of money available for something made out of paper, with no backing, and that is likely to be printed like there is no tomorrow. Dwell on that.
W bottom pattern forming?
Source: TradingView
The short-term chart for $BTC reveals that the bounce from $112,000 has run out of steam and that now the price is trying to hang on to the bottom trendline of the bull flag. Given that the short-term Stochastic RSI still needs to come down and reset, there may be another dip below. However, this could form a W pattern which has the potential to send the price back towards the highs.
If the price does sink further and makes a lower low, there is the possibility that the big support at $109,000 could be tested.
Daily time frame signalling decent upward movement?
Source: TradingView
The daily chart puts things into a clearer perspective. It can be seen that the $112,000 horizontal support is also bolstered by the 50-day SMA. If the W pattern does play out, it could be that the price comes down to retest the 50-day SMA before bouncing from there.
At the bottom of the chart, the Stochastic RSI indicators are shaping to cross above the 20.00 level. Once they both cross above, this is the signal for upside price momentum. Looking left at previous daily cross-ups from the bottom, it can be seen that they have all signalled decent price rises.
Near a top, or is it already in?
Source: TradingView
The weekly chart for $BTC gives some cause for concern, due to the fact that the indicator lines are currently coming down hard from the top. The weekly chart would normally presage what is going to happen on the 2-week chart, so it is interesting to see what this can tell us.
The 2-week chart shows that the indicator lines are crossing into very bullish territory. That said, there could be the beginnings of a roll-over of these indicators unless some positive price action comes into Bitcoin soon.
Looking back over the last two bull markets it should be noted that these indicator cross-ups from the bottom are quite rare. Since the top of the 2017/2018 bull market there have only been 7 of them. We are currently on the eighth. If there was a cross-down from here, would there be time left in the bull market for another cross-up? Given that they generally take the best part of a year to come all the way down and then all the way back up again – it’s unlikely.
At the bottom of the chart the RSI illustrates that the indicator line was rejected at the downtrend line. Unless it breaks through here it will be unquestionably bearish, not to mention the bearish divergence that could be about to play out, with the price action heading upwards while the RSI and possibly the Stochastic RSI, are dropping.
However, there is no green-shaded top area for the apex of the bull market? Be that as it may, if one goes back to the last bull market, the green-shaded area occurred at the first peak of the double top. The second, higher peak, took place as the RSI indicator was already well on the way back down to the bottom. Much food for thought.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
source : https://cryptodaily.co.uk