Is the Short-term Chart for Bitcoin Bullish or Bearish?
See Figure 1 below. Here I plotted about six months’ worth of daily candles with several important technical indicators (TIs):
- A Relative Strength Indicator: The RSI5
- Three simple moving averages: 20-day (dotted green), 50-day (blue), and 200-day (red)
- The Bollinger Bands: solid green
- The Ichimoku cloud: see here, aka “The Cloud”.
- The Moving Average Convergence/Divergence: MACD
- Money Flow Indicator: MFI14
Albeit there are many more TIs, these six are my bread-n-butter indicators to help assess the cryptocurrency’s most likely trend. Let’s work our way down.
Figure 1. Bitcoin daily chart with technical indicators
- The RSI5 is currently<70 and except for early March it not been able to move and stay above that level for long. Thus, it signals weakness. Bulls 0, Bears 1.
- BTC is below its 200d SMA, but above its 20d and 50d. Thus it is technically in an intermediate-term uptrend but in a long-term downtrend. It will have to close above the former to re-establish a new Bullish uptrend. Compare now with October-December 2020, for example. Bulls 1, Bears 1.
- The crypto is above “The Cloud.” When it is above it, good times tend to happen. Compare now with October-November 2020, for example. Bulls 1, Bears 0
- The MACD is on a buy and is trending higher, albeit slowly, and with price not making much progress over the past several weeks, momentum indicators can be misleading. Regardless up is up, and buy signal is a buy signal. Bulls 1, Bears 0.
- Money is flowing back into BTC, but not at a strong clip. It is not even above 80, like in October last year. Bulls 0, Bears 1.
- Price is at the upper Bollinger band, but the bands are not expanding which would indicate a stronger uptrend. If/when BTC does “ride the band” like October last year, the Bulls will be in charge. Until then it is a neither/nor set up: Bulls 1, Bears 1.
Bottom line: the chart is currently neutral.
The overall cumulative verdict based on these TIs is Bulls 4 vs. Bears 4. Thus, the current price chart for Bitcoin is neutral based on these simple but effective TIs. A breakout above $45K is needed to give the Bulls the edge to target the 200d SMA and possibly $54K. However, a fall back below the 50d SMA and the cloud, can target the low-30Ks once again and possibly as low as $24K. Thus, the Bulls and the Bears will continue to slug it out on the trading floor, social media, blogs, and comments sections. But ultimately, the chart will tell us who the winner will be so watch the breakout vs breakdown.