The price of Bitcoin (BTC), the top-ranked cryptocurrency, currently sits around $9,000, after last week’s impressive 20% rally in a single day. With the halving now less than 2 weeks away, it might seem like a no brainer to go long on Bitcoin to catch the next explosive move.
However, there is one chart view that suggests we may have topped out, and that is what I’ll start with today.
Daily crypto market performance. Source: Coin360.com
If in doubt, zoom out
BTC USD daily chart. Source: TradingView
In last week’s analysis, I shared two possible ascending channels, one of which was invalidated leaving one in play. This week, I want to look at the possibility that we were not inside either channel and the fact we could still be in a downtrend since the June 2019 pump that almost hit $14,000.
The upper trend line is validated by three touches. However, the lower trendline of this channel puts the immediate downside as low as $3,000 with the moving average around $6,300. These are not numbers that I expect Bitcoin to see again, but it would be foolish to not be prepared for it.
The Fib hints at what a breakout could bring
BTC USD daily chart. Source: TradingView
The Fibonacci retracement levels from the ATH of $20K per Bitcoin are showing us that a breakout today could see us return to much higher levels than previously expected.
$9,550 is the critical level to focus on. It’s both the 0.382 Fib and the top of the channel. Claiming this level could see Bitcoin soar towards the 0.5 Fib of $11,50,0 which then realistically puts the 0.618 Fib of $13,500 on the table.
Now that’s all well and good, but “number go up” doesn’t always happen, and one such indicator that can be relied on to confirm the direction we’re headed based on the current momentum is the monthly Moving Average Convergence Divergence indicator or MACD.
MACD monthly analysis
BTC USD monthly MACD chart Source: TradingView
Last week, I highlighted the significance that the moving average divergence convergence (MACD) Indicator has on the price of Bitcoin when it crosses bullishly on the weekly timeframe.
However, with the bullish monthly candle close comes a new picture for the monthly MACD. Mapped out above is the monthly MACD bullish and bearish crosses with the weekly MACD bullish crosses highlighted with the dotted lines — green for bullish crosses that saw a big run after, and red dotted lines for the false bullish crosses.
The reason for this map is to see if there are patterns that match with the 2017 weekly bullish cross that saw a 2,000% rise. But it’s also useful to see if the higher time frame view is showing us any contradictory momentum that could suggest a dump is due soon.
Moving from the left to the right of the chart, what this shows is that back in March 2017 when the weekly MACD crossed bullish, the monthly MACD was already in a bullish crossover from 2015.
Thus, at the point of the weekly bullish crossover, both the MACD and signal lines were on an upward trajectory. This resulted in a 2,000% increase in price for Bitcoin from the point of the weekly cross.
Later on, the false bullish crossover on the weekly in September 2018 shows us that the monthly MACD and signal line were both in a downward trajectory and that the monthly MACD was already crossing bearishly. Thus, the higher timeframe momentum was signaling that the move from weekly MACD crossover may not be valid.
The February weekly bullish crossover seemingly has exactly the same conditions as the September crossover with one difference. The histogram on the monthly MACD was losing downward momentum as can be seen by the paler pink color compared to the darker pink in the previous crossover. In this case, it resulted in a 400% increase in the price of Bitcoin.
Now looking at the 2020 momentum, we can see that the monthly MACD was chopping and changing direction between December and February, which led to the signal line and MACD having a sidewards trajectory — quite literally a first for Bitcoin.
But if you’ve read this far, and you’re still following where I am going with this, the monthly signal line is on an upward path for the first time since October 2015, back when Bitcoin was just $200 per coin, and if you take this to the $20K all-time high, that’s a monstrous 10,000% or 100x move.
So with this in mind, will the next bullish cross on the monthly MACD happen in June? Are we in store for a 10,000% increase from the current price? Only time will tell.
Bitcoin starting to breakdown
BTC USD 1 hour chart. Source: TradingView
Drilling down to the hourly now, and we can see that Bitcoin was starting to form a pattern of lower highs and higher lows after its big leg up last night.
Typically this signals a potential continuation of the previous trend, and the upside potential is around $9,600. And if we had held this level for a candle close on the daily, then next week would have looked to be incredibly bullish.
As this has just broken down, a pullback to $8,400 throughout the week is to be expected.