Bitcoin has retreated from its monthly highs as market participants rush to book profits in their long positions amid fears that the cryptocurrency may have been overbought. Bitcoin is currently trading at $244.12, down 1.38 percent and closer to the crucial upward sloping support line.
Just yesterday, we discussed how Bitcoin started the week on a strong note, and flash forward 24 hours, the bulls have frittered away the advantage. The uptrend is still intact, but the momentum and strength readings have clearly been hit.
Bitcoin Chart Structure – As Bitcoin struggles to limit its losses, the bears have pushed the price below the 200-day SMA of $245.4708. The upper range of the BB, as was put in the previous Bitcoin price analysis, has acted as the resistance. The violation of $240 will be the first strong signal of a trend reversal.
Moving Average Convergence Divergence – The Histogram has seen a cut in its value as MACD goes horizontal. The latest value of MACD is 2.9014, that of Signal Line is 2.3082, and that of Histogram is 0.5932. Today’s value of Histogram is a drastic reduction from yesterday’s 1.0789.
Momentum – The Momentum reading has dived to 5.9800.
Money Flow Index – One positive from this profit booking is that Bitcoin has eased from overbought valuations. The MFI value is now 68.8679.
Relative Strength Index – The 14-day RSI value has weakened to 58.5291.
At the current stage, there is nothing to be concerned about. Simply place a tight stop-loss below $240 and keep following the technical indicators for any divergences. Go long in Bitcoin near $242 for a target of $250.
One particular sign of weakness that irks me is that the cryptocurrency has been unsuccessful at holding its head above the technically important 200-day SMA. I would keep an eye out for this one as well!