Bank Sponsored
Bitcoin Stalls with Double Top Potential

bitcoin 1h chart 3/12
Bitcoin has been bullish since the end of February coming off consolidation lows near 232.  After another conslidation last week, bitcoin continued to march higher this week, tagging 276 before stalling. The 1H chart shows a bullish market.
1) The 200-, 100-, and 50-hour simple moving averages are in bullish alignment and are sloping up.
2) Price action has held above the moving averages.
3) The RSI has tagged above 70 and held above 40 this week.

While these bullish signals are there, we are also seeing some signs of potential consolidation or bearish correction ahead.

The 1H chart also shows price stalling around 296 again as it did during the 3/10 session. This suggests a potential double top, but saying that the market will reverse is premature. We do also have a bearish half divergence with the RSI. (The half divergence describes price making the same high while the RSI is making a lower high. Maybe if a 1-hour candle falls below 293 and thus clears below the 50-hour SMA, we will have a push back towards the recent lows around 285.

Bitcoin also looks a tad overbought in the 4H chart.

Bitcoin (BTCUSD) 4H Chart 3/12
bitcoin 4h chart 3/12
(click to enlarge)

The 4H chart shows us a half bearish divergence as well. This is simply the same divergence seen in the 1H chart. The thing is, the RSI was also coming off of overbought levels signaling that the market is already in some consolidation. The question is, for how long.

We can also see that if there is a bearish push in the near-term, we should limit that outlook first to the 280 handle, which was a previous common resistance, a psychological level, and where the 50-period SMA resides in the 4H chart.

Bitcoin (BTCUSD) Daily Chart 3/12
bitcoin daily chart 3/12
(click to enlarge)

The daily chart does not show the divergence, but it shows the RSI tagging 70, while price approaches a previous support/resistance area. While we might not have immediate expectations of a reversal, we should start getting ready for one if price pushes above 300. 321 is the high on the year, and we should limit our bullish outlook to this level, while being ready for a pending bearish one.

Previous Post by Author: Litecoin Surges then Pulls Back after a Break of Resistance

Tags: , ,

Leave a Reply

We use cookies to give you the best online experience. By agreeing you accept the use of cookies in accordance with our cookie policy.