My first technical review of Bitcoin
In that article, I applied pivot analysis to point out that I thought the wildly bullish forecasts of a rise from around $8500 to over $30,000 were off target. As it turned out in December 2018 it had a low of $3251. To me basing a price projection on actual data has always been the best strategy.
In April of 2022, even though Bitcoin has declined 20% from its yearly pivot at $48,259, I saw the headline “Experts Say Bitcoin Could Hit $100,000 …” so in my view this warranted a new objective technical appraisal.
My outlook then was negative and that has been maintained in the several follow-up articles that are listed at the end of today’s contribution. In early October, after Bitcoin had moved higher for two consecutive weeks I was not impressed as I featured a new chart of the Bitcoin futures from my colleague Jerry A.
Several of my past articles are highlighted on the chart along with some of the key technical indicators. One is the 20-week EMA which is programmed to be yellow when it is declining as it has been since the March high. As the rally peaked in August and the bullish sentiment surged Bitcoin stopped well below this level.
Prices closed this week below the starc- band which means it is oversold as it was twice before this year. This allows for some sideways action or even a brief bounce before there is a further decline. The high from June 2019 is at 13,826 with QPivot support at 13,764 so that is likely the next downside target. The yearly S2 support is at $7774.
The VolConfirm, which combines the OBV along with other volume indicators, turned negative in the spring (see chart) and was trying to improve before last week’s high volume decline. Typically, a weekly volume bottom takes at least 3-6 weeks to form while technical rallies often only last two weeks.
The AsprayInsight analyzes the relative performance of Bitcoin against the S&P 500. It has been negative all year which means that Bitcoin is acting weaker than the S&P. Successful investors and traders want to concentrate on markets that are acting stronger not weaker than the S&P 500.
For now, a weekly close above $21,593 is needed to stabilize Bitcoin’s price. My sympathies are with anyone who is caught up in last week’s cryptocurrency disaster as there is no comfort for me when my bearish forecasts are correct.
Here are Tom’s past Bitcoin articles