BTC - A Few Warning Signs
Hello Traders. Today I wanted to outline some key warning signs that are starting to develop in the BTC chart. I am still more bullish on price and our macro still looks good for BTC to move to 
48K, but if these warning signs start to play out then BTC's price could be in some trouble in the short term.
On the left we have the daily chart and on the right we have the weekly chart. The daily chart shows us how the key the $31,400 price level is. We have had many wicks to it and all of the daily candle bodies have closed below that level. Once we close a daily candle above $31,400 is when the momentum and strength should be able to break price out of this range. Right now $31,400 is clearly a level being defended by sellers. We can also see the strength of the buyers have diminished over the past couple weeks. This is shown in our RSI where our RSI continues to make lower highs while price makes higher highs. This is known as a bearish divergence and shows a weaker market.
On the weekly timeframe we see that we wicked up to the 100 MA before having a sharp selloff. This has created a gravestone doji/blow off top candle on the weekly timeframe which could also signal weakness in the market. In addition to this we have a potential rising wedge pattern forming for BTC. Rising wedge patterns historically lead to large breakdowns. As long as we can get 2 weekly candles to close above our top yellow line then this pattern will be negated. If price closes 2 weekly candles below our bottom yellow line the the measured move price target of the rising wedge breakdown would bring price back to $17-18k.
Again, I do not feel like this is the most likely scenario. I just wanted to point out these warning signs so we can examine them and see what changes over the next couple weeks. Happy Trading!
48K, but if these warning signs start to play out then BTC's price could be in some trouble in the short term. On the left we have the daily chart and on the right we have the weekly chart. The daily chart shows us how the key the $31,400 price level is. We have had many wicks to it and all of the daily candle bodies have closed below that level. Once we close a daily candle above $31,400 is when the momentum and strength should be able to break price out of this range. Right now $31,400 is clearly a level being defended by sellers. We can also see the strength of the buyers have diminished over the past couple weeks. This is shown in our RSI where our RSI continues to make lower highs while price makes higher highs. This is known as a bearish divergence and shows a weaker market.
On the weekly timeframe we see that we wicked up to the 100 MA before having a sharp selloff. This has created a gravestone doji/blow off top candle on the weekly timeframe which could also signal weakness in the market. In addition to this we have a potential rising wedge pattern forming for BTC. Rising wedge patterns historically lead to large breakdowns. As long as we can get 2 weekly candles to close above our top yellow line then this pattern will be negated. If price closes 2 weekly candles below our bottom yellow line the the measured move price target of the rising wedge breakdown would bring price back to $17-18k.
Again, I do not feel like this is the most likely scenario. I just wanted to point out these warning signs so we can examine them and see what changes over the next couple weeks. Happy Trading!
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