Bitcoin Price Analysis: Topping out around the 50-day EMA
Bitcoin Price Analysis from Cointelegraph, Week of May 11
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Price at the time this article was written is: US$238.38
Last week the article began with:
“The Bitcoin price continues to be range bound. This appears to be looking like the top of that range. Last week the price was ~$225 USD as of this writing and now its at $238 USD. It has attempted a few times to get above $240 USD, which is proving to be major resistance. This is where the 50-day exponential moving average now lies. In the last few days price has tried to stay above this level and hasn’t been able to.”
There has been quite a bit of good news lately (itBit fully regulated, Goldman Sachs Investment in Circle, GBTC now trading) and yet the price reacts less and less to it. Price continues to get faded at lower levels. When good news continues to be discounted this is another bearish sign.
Technically not much has changed. As has been mentioned in previous articles the slope of all the EMAs (50, 100, and 200) is sloping downward. Price is having trouble holding above the 50 day EMA. The best case scenario would be to see a flattening out of the moving averages as a sign of improvement. However, this has not happened yet.
The indicators continue to remain in neutral territory. This move still appears to have limited upside and appears to be topping out as volume and momentum have not followed the price higher and many of the indicators have flattened out.
While there have been some improvements in price in the short term, nothing has changed as far as the long-term trend goes. The price broke through 240 only to come back down and now sits right below the 50-day EMA, which once again is proving to be big resistance. If price were able to break above and hold right, 250-255 looks like it would be the top of this move. The weight of the evidence says this move should not be trusted and is nothing more than a countertrend rally. This could change if the indicators and volume were to confirm an upward price move.
The 1-year chart (long-term) of Bitcoin remains bearish. Price continues to be range bound. The price remains below all 3 of its Exponential Moving Averages (EMAs). The 50-day EMA is proving to be a major resistance area and right now, that is approximately at ~US$240. Price has not been able to stay above it in recent days.
As mentioned above, the slopes of all 3 EMAs are bending downwards as well. This is symptomatic of falling prices that are not ready to rise and if they can continue to slope downwards, the price will follow, which can lead to an accelerated downtrend.
The Money Flow Index (MFI) and the Relative Strength Index (RSI) both are following the same pattern they have risen to neutral levels and have now flattened out and are looking like they are beginning to turn downwards. Simply put, momentum is beginning to wane and this move doesn’t seem to appear to have much more strength in it. Also note that the MACD is sitting on the zero line and has essentially remained flat. These are not signs of a trend change.
-- Ichimoku Clouds
The 1-year Ichimoku (cloud chart) continues to confirm this bearish scenario, even though it’s becoming more neutral. Price has entered the bottom of the cloud ever so slightly and this conforms to the 50-day EMA as resistance. It did not burst in with volume so it may not hold for very long.
The cloud is major resistance and it confirms the ~US$255 area as the potential upper top of this move if the price were to get there.
The cloud ahead in the future continues to flash a warning sign. It is 26 days ahead in the future and is future resistance and it currently lies at ~US$228. This is below the current price which means something has to give and in this case it looks like price will confirm this move and head lower. That cloud had a bearish crossover a couple of weeks ago and continues to predict lower prices in the future. The cloud continues to descend providing additional pressure on the price.
Aside from the price below the cloud, the Chikou Span (Lagging Line) is below the cloud, along with the Tankan Sen (Conversion Line) and the Kijun Sen (Base Line). Crossing into the cloud and above it would be a positive sign but this has not occurred yet. The Tankan Sen and Kijun Sen lines have crossed underneath the cloud which is a positive signal but it’s still wait-and-see on whether price confirms.
Meanwhile, nothing in the Ichimoku chart shows signs of an imminent reversal but it is time to be vigilant and see what transpires in the coming days. For further definitions of what is being discussed, please refer to this previous post on Ichimoku cloud charts.
Using Fibonacci retracements from an intermediate-term price high of US$427 recorded back in mid-November, we see that the price is above .236 support at ~US$231. If it breaks below this, the downside scenarios mentioned below would take place. As of this writing price is ~US$238. Having failed (yet again) to break above resistance and hold US$240 a test of US$231 is likely.
The US$210 level continues to be major support and should be retested. The RSI and MACD are both flat and appear to be topping out. This continues to show that momentum is stalling.
I have also added the Directional Movement Index (DMI), which looks at buying and selling pressures. The blue line indicates buying pressure, the red line indicates selling pressure and the orange line is the ADX, which indicates the strength or weakness of a trend.
As one can see, selling pressure has fallen as has the ADX line indicating selling pressure has receded in the last few weeks. The Blue Line (buying pressure) crossed over selling pressure last week, but is pointed downward along with selling pressure and the ADX. This indicates momentum is petering out and that the price may continue range-bound and directionless on very small volume. This is happening at low levels which means volume and momentum are not confirming the higher move that occurred to the top of the price range.
Looking at the short-term trend (May 9 price high of ~US$247) using Fibonacci retracements, the short-term price trend looks to have topped out at ~US$247 where it couldn’t hold above the 50-day EMA and now appears to be heading lower.
Short term US$236, US$233 and US$231 are support areas which look like they will be tested. If these should break down US$225 and US$221 come into play. The RSI and MACD are both heading down confirming the price. The ~US$210 area should provide support if price breaks below the targeted areas mentioned above.
The primary downtrend continues. While prices have moved higher, it appears to be the top of the range and most indicators are confirming this. Momentum and volume have not followed price higher. The 50-day EMA continues to be very big resistance as price has failed to stay above it. If price does move higher, be suspicious. It still looks like there are lower levels to be tested. Every rally in price in recent months has been at lower levels and this latest one demonstrates that point. A retest of the ~US$210 area looks like a real possibility.
Disclaimer: Articles regarding the potential movement in crypto-currency prices are not to be treated as trading advice. Neither Cointelegraph nor the Author assumes responsibility for any trade losses as the final decision on trade execution lies with the reader. Always remember that only those in possession of the private keys are in control of the money.