Looking at the MACD and RSI , you can see that we are currently forming a bearish divergence, as prices have made higher highs, but the RSI and MACD have both made lower highs. Comparing that to what happened earlier this year, you can see that the indicators were also making lower highs as BTC was printing higher highs, and that divergence inevitably lead to a 55% correction. So, if the 618 holds as overhead resistance, it will likely trigger another correction as projected by these bearish divergences.
While there are also some bullish indicators out there, I’m leaning more towards the bearish side, especially if BTC cannot recover above the 61.8% retrace here on the daily. If it does get above that level, and defines it as support, I may reconsider my opinion on the direction of the market in the short term. That would be especially true if the divergence trends were broken on the indicators. On the other hand, if we see a failure here for BTC to recover above the 61.8% retrace, I think it will add to the evidence that suggests that there is an ordinary bear market rally.
Many investors get blinded by the power of bear market rallies in crypto, only to end up getting destroyed when the downtrend resumes. Rallies of 85% or more have happened in every bear market in BTC’s history. Yet, the trend eventually resumes, and prices fall dramatically. Just because we’ve seen a rally, doesn’t mean that we’re in a bull market. For that to become apparent, we will need to see more evidence of an upside recovery, which would start with BTC recovering above the 61.8% retrace. Also, there is still a death cross on the chart, as you can see, which doesn’t bode well for the medium-term view, although the averages are converging. Overall, my short-term view is that this rally is running out of steam, and we will most likely return to the downside in the near future. That view could change if we see a surge of strength, but the indicators aren’t currently projecting a move to the downside.
I’m The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
