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Bitcoin: The Start of a Breakdown 4H (May 09)

X Force Global Analysis:

Bitcoin has shown weakened bullish momentum, after having tested the 10K resistance. In this analysis, we explore the probabilities of having topped out.

Analysis

- The first thing we notice is the huge bearish divergence that has formed on the 4H chart
- We see a textbook bearish divergence, with higher highs on the price, and lower highs on the indicators
- The lower highs formed on the Relative Strength Index (RSI) demonstrates weakened bullish strength
- The Moving Average Convergence Divergence (MACD), also demonstrates weakened momentum, with lower highs on the moving averages
- The MACD is also forming a death cross
- We have formed an ascending wedge pattern, which is a bearish reversal pattern
- However, as the ascending trend line support has not broken down yet, we are still in a phase of consolidation
- We could expect a selloff dropping down close to the 0.786 FIbonacci support
- This support level is also where the ichimoku cloud support converges
- As the ichimoku cloud demonstrates signs of a clear uptrend, a break and close below the cloud could provide confirmation for a downtrend

Market Sentiment:

The long short ratio remains at 61 to 39, with long positions having reduced significantly. Nonetheless, these positions demonstrate that the market sentiment is still dominantly bullish.

What We Believe

As we have mentioned in our analyses before, while Bitcoin has shown a bullish trend, it has been overbought and overextended for such a long period of time. Testing 10K resistance levels has been part of our anticipated cases, as we continue to approach the market from a bearish perspective.

Trade Safe.