Bitcoin(BTCUSD) has moved back below the 50% Fibonacci retracement level after hitting 61.8% Fibonacci resistance near $10,000 this past Thursday into Friday as traders pushed price higher ahead of the halving event which took place today. The rally on Friday was also fueled by legendary trader Paul Tudor Jones announcing that he has entered the cryptosphere as an inflation hedge. The push up to the 61.8% Fib level was strong enough to create yellow price candles which indicate bullish momentum volatility according to my price candle algorithm. During periods of bullish volatility it is risky to short or exit trades as price is most likely to head higher, but once the bullish momentum volatility goes away the move that follows is important to watch. As a rule, if price remains above the first yellow candle then the trend and momentum bias is still to the upside. If price falls below the first yellow candle it shifts the bias to bearish. For now price remains above the first yellow candle seen leading up to the rally into 61.8% Fib resistance which indicates that there is still a bullish bias, or a positive trend behind price.
Today’s price candle is indicating trader indecision as the candle color has shifted to gray which indicates no momentum. Today’s candle is also a doji candle which is a price candle with a small body and upper/lower wicks of relatively the same length. This shows that traders attempted to push price higher and lower but were able to maintain the upper and lower price levels and ultimately are going to close today’s price near where it opened. Neither bulls nor bears were able to direct price with conviction in either direction.
The Relative Strength Index(RSI) show the green RSI line retreating from highs near the 80 level which indicates a loss in upward momentum. The green RSI line has also crossed below the purple signal line which is a bearish cross and indicates further weakening in short-term upward momentum. The rate of decline in the green RSI line as decreased just above the 50 level which is the midpoint of the total RSI range. The green RSI line trending above the 50 level generally indicates overall bullish momentum while an RSI reading below 50 would indicates overall bearish momentum. Going forward the RSI line needs to hold above the 50 level in order to maintain bullish momentum bias.
The Price Percent Oscillator(PPO) show the green PPO line crossing below the purple signal line which is is a bearish cross and indicates a loss of upward momentum in the short-term. Both lines remain above the 0 level for now though which indicates that the overall momentum is still positive. A PPO reading above 0 indicates overall bullish momentum while a PPO reading below 0 indicates bearish momentum.
The Average Directional Momentum Index(ADX) shows the green directional line declining and close to crossing below the purple directional line. When the green line is above the purple line it indicates a bullish trend direction in price, when the green line is below the purple line it indicates a bearish trend direction in price. The histogram in the background is declining which indicates that direction strength is weakening, and since the green line is above the purple line at the momentum the declining histogram indicates a weakening bull trend in price.
Volume has been on a slight increase during the run up in price, but overall is still relatively low compared to volume seen during previous advances and declines in price.
Overall, the current view on Bitcoin here is neutral based on the rejection off of the 61.8% Fibonacci level, the cross back below the 50% Fib level as well as the return to a gray price candle. The momentum and trend indicators are pointing to a period of consolidation or pullback as they are showing a loss in upward trend and momentum. For now the main level to watch is the red line stop-loss level near $7,300 which is just below the 38.2% Fib level. This stop-loss level is placed just under the first yellow candle which is when bullish momentum volatility began leading into the halving event and is the level that price needs to remain above for price to be considered in an uptrend. Falling below the 38.2% Fib level would also put price back into the purple shaded area which is a bearish area of the total Fib range. In general, you want to see price trending in the green shaded area above the 61.8% Fib level as a sign of a strong uptrend. The move now is to wait for a move above the 61.8% to go bullish, while a move below the 38.2% would be bearish.
Today’s price candle is indicating trader indecision as the candle color has shifted to gray which indicates no momentum. Today’s candle is also a doji candle which is a price candle with a small body and upper/lower wicks of relatively the same length. This shows that traders attempted to push price higher and lower but were able to maintain the upper and lower price levels and ultimately are going to close today’s price near where it opened. Neither bulls nor bears were able to direct price with conviction in either direction.
The Relative Strength Index(RSI) show the green RSI line retreating from highs near the 80 level which indicates a loss in upward momentum. The green RSI line has also crossed below the purple signal line which is a bearish cross and indicates further weakening in short-term upward momentum. The rate of decline in the green RSI line as decreased just above the 50 level which is the midpoint of the total RSI range. The green RSI line trending above the 50 level generally indicates overall bullish momentum while an RSI reading below 50 would indicates overall bearish momentum. Going forward the RSI line needs to hold above the 50 level in order to maintain bullish momentum bias.
The Price Percent Oscillator(PPO) show the green PPO line crossing below the purple signal line which is is a bearish cross and indicates a loss of upward momentum in the short-term. Both lines remain above the 0 level for now though which indicates that the overall momentum is still positive. A PPO reading above 0 indicates overall bullish momentum while a PPO reading below 0 indicates bearish momentum.
The Average Directional Momentum Index(ADX) shows the green directional line declining and close to crossing below the purple directional line. When the green line is above the purple line it indicates a bullish trend direction in price, when the green line is below the purple line it indicates a bearish trend direction in price. The histogram in the background is declining which indicates that direction strength is weakening, and since the green line is above the purple line at the momentum the declining histogram indicates a weakening bull trend in price.
Volume has been on a slight increase during the run up in price, but overall is still relatively low compared to volume seen during previous advances and declines in price.
Overall, the current view on Bitcoin here is neutral based on the rejection off of the 61.8% Fibonacci level, the cross back below the 50% Fib level as well as the return to a gray price candle. The momentum and trend indicators are pointing to a period of consolidation or pullback as they are showing a loss in upward trend and momentum. For now the main level to watch is the red line stop-loss level near $7,300 which is just below the 38.2% Fib level. This stop-loss level is placed just under the first yellow candle which is when bullish momentum volatility began leading into the halving event and is the level that price needs to remain above for price to be considered in an uptrend. Falling below the 38.2% Fib level would also put price back into the purple shaded area which is a bearish area of the total Fib range. In general, you want to see price trending in the green shaded area above the 61.8% Fib level as a sign of a strong uptrend. The move now is to wait for a move above the 61.8% to go bullish, while a move below the 38.2% would be bearish.