This was a very interesting week. Almost the whole week the coin was falling, but yesterday it was stick saved and the candle seemed to shift the trend direction at least for the short term.
BTC picked the option 3 from my previous analysis, and I would like to explore the possibilities from the perspectives of candles and technical indicators on the different time frames.
The monthly chart reminds a runaway train. The price is well above the 8 EMA line and it is outside of Bollinger Bands. At the same time, the RSI is grossly overbought, >91, and the last three candles show the building bearish pressure. It is unknown for how long this could continue, but the warning signs are all over the place.
This week closed above 55051, and the current combinations of candles hint for a possible new all time high.
The concerning part is the Head & Shoulders in RSI and its negative divergence with the price. The similar patterns in RSI in 2018 and 2019 were followed by 84% and 71% declines for 12 and 6 months respectively.
Though I am technically neutral for the next week, there is a possibility of a sudden sharp move down any time from now on.
On the candlestick chart above, yesterday BTC completed a Bullish Engulfing. Today it was supported by the 8/20 EMA cross. Everything looks very bullish except the clear negative divergence of price with RSI. As the coin seems to be shooting for another all time high, my main focus would be on RSI and it’s correlation with the price.
For the analysis of the daily frame I additionally charted the channel and the projections of the patterns.
If we draw a long term channel, we can see that on Wednesday and Thursday the coin closed below the long term channel boundary and it was stick saved on Friday. It is worth noting that the volume on Friday’s and Saturday’s (and actually in the last several weeks) green candles is much lower compared to the volume on the red candles. I think it says that the market participants are ready to sell, they just wait for some event that would finally tip the scale.
I projected two possible bullish paths on the chart. The first one in the case of a regular rally for a week of more. In this case BTC would hit 69000-73000.
The second case is for a completion of a diagonal, possibly bound by the red lines. In this case the coin could reach 63000-67000.
However, given the increasing bearish pressure on all three charts, there is also a possibility of a very quick advance to a new all time high (Sunday-Monday) followed by a sharp reversal before the end of March. The first sign of this scenario would be a break through the lower boundary of the long term channel.
The next 4 days (Sunday-Wednesday) would be critical for printing the monthly and quarterly candles for BTC and I hope they can provide more clarity for the long term projections.