After an entire MTF uptrend has been put in, Bitcoin (BTC) is starting to look topheavy with some indicators turning bearish on the weekly chart. But the leading crypto remains very much in a HTF bull market; and in such a situation, corrections may be few and far between, and surprise breakouts tend to come to the upside rather than down.
We start on the weekly chart with a freshly painted candle, which has equal parts selling and buying with a modest pinwheel in between. Bulls and bears here look evenly matched, and we saw more volume last week during this battle than the previous bullish week. There are two levels for Bitcoin to possibly hold on a retrace. These are $9,500 and $9,100, which were both important levels to break on the recent uptrend.
We see the 8 EMA lying right in the middle of this range, and if a MTF downtrend forms we might expect at least a test of this level. But in general, the EMAs are looking very good after returning to a fully bullish configuration – a HTF uptrend is illustrated by this bullish ‘EMA fan’.
Also of general note is the historically modest volume, for an uptrend. We can view this as a bullish phenomenon, pointing to an uptrend before a significant number of people have entered – or reentered – the crypto markets.
If we focus on the weekly indicators, we definitely see some bearish signs showing up which might telegraph a MTF downtrend. The histogram in particular has taken a sharp turn down with an bearishly contracting arch.
The RSI has also painted a drop, although it has done so after a clear break above the historic bullish zone (grey band); in the history of Bitcoin bull markets for the last few years, this level, once taken, has not been lost on any pullback. As such, we should only worry about the HTF uptrend if this bottom level – about 54% – is actually lost.
Finally, on the daily, we see that the uptrend is just about to break. If this level does not hold, we are likely to see that MTF downtrend and some correction to the 2020 surge.
If this happens, we could reasonably see price come down to about $8k. The first candidate for support, however, is at the same zone described above: between $9,500-100, which was an important level during June-August of 2019; and this is also where the .382 Fibonacci level lies.
The main question now is whether a MTF downtrend will come. It would be no surprise, and not necessarily damage the HTF uptrend at all; in fact, it could be thought of as healthy base-laying.
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