Bitcoin: Bearish Divergence Analysis 4H (May 18)

X Force Global Analysis:


While Bitcoin has recently shown a big breakout, it has failed to create new highs. In this analysis, we explore the bearish evidence for bitcoin suggested by technical analysis.

Analysis

- The first thing we spot is a clear bearish divergence on the 4H chart
- We see the formation of higher highs on the price, and lower highs on the indicators
- The Relative Strength Index (RSI) shows weakened strength as it creates lower highs
- The Moving Average Convergence Divergence (MACD) also shows decreasing bullish histograms, and a potential death cross in play
- We have seen strong support and resistance zones between the 0.236 and 0.382 Fibonacci zones
- For a bearish trend confirmation, it's important that we break and close below the 0.382 Fibonacci support
- Based on Elliott Wave counts, we can see a clear Impulse Wave (12345) count that has ended
- It's also important to note that on a larger trend, it's the first time in days since we have created a lower high


Market Sentiment:

Long short ratios are at 73 to 27, with even more longs than shorts. The amount of long positions are increasing dramatically, with dominant bullish sentiment in the market due to the overall bullish trend.


What We Believe

We believe that a short term corrective wave might be in play, based on not only the bearish divergence, but also elliott wave counts suggesting the end of an impulse wave. However, a break of the resistance levels to the formation of new highs would negate this scenario.

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