#49 | Dueling Trends
Bitcoin is facing a short-term correction on the weekly chart, while the monthly looks poised to continue the ongoing uptrend. How does this play out?
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Issue #49 overview:
Bitcoin drops below $60,000 in the latest selloff: what does this imply?
Weekly technicals point to a continued short-term downtrend
Monthly technicals remain focused on a growing uptrend and continuation
How do these different timeframe technicals come together to paint the full picture?
Alternate wave counts for Bitcoin warrant deeper correction
Could altcoins hold up while Bitcoin shows weakness?
Unfortunately, Bitcoin is looking to have switched to a short-term bearish trend. That said, this correction appears to be on the weekly timeframe, with monthly timeframes and higher still pointing to an uptrend and continuation when this bearish phase comes to an end. Let’s take a closer look at what the technicals are telling us.
On the weekly timeframe, bears have regained control over BTCUSD for the first time since August 2023. The red DI- above the green DI+ shows that bears are in control. During the late August 2023 correction (black arrow), although bears did regain the upper hand briefly, bulls were able to make a stand and kick off a more impulsive uptrend. In August 2023, the green DI+ never fell below a reading of 20, leading to the bounce in favor of bulls. Currently, Bitcoin is teetering on that 20 line, giving the chance of another bounce and uptrend continuation. However, there are more factors to consider.
Turning off the DI- and DI+ and turning the ADX on, we can see that the August 2023 correction occurred just as the ADX fell below a reading of 20. A reading above 20 suggests a trend is emerging, while a reading below 20 says there isn’t enough strength to justify a trend. Today, the ADX is in sharp decline compared to back then. This tells us that the previous uptrend is currently still potentially active, but becoming weaker by the day. If the ADX falls below 20, the uptrend will be over until conditions improve.
Bearish momentum on the weekly LMACD is increasing, according to the dark red ticks on the histogram. This correction is nowhere as strong as what we’ve seen in the past, so more downside could be likely to match normal corrective behavior in Bitcoin. At the very least, the histogram ticks would need to turn pink to suggest weakening bearish momentum before there is a chance of reversal. If the LMACD falls below the zero line, there is a chance of a bear market. For now, this is just corrective behavior during a bull run.
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