Last week we said:
There are bearish indicators on the 4H and Daily charts, but bullish divergences, solid fundamentals, and a bottoming-out investor sentiment could signal a reversal soon. The stochastic indicators show that a reversal in short and mid-timeframe momentum could be in play, potentially confirming a “higher low” for the third time in a row on the weekly chart.
At the time of last week’s article, BTC was trading at around $39k. We identified some bullish divergences, and correctly predicted a reversal. BTC traded up to the $42k zone, where it was rejected and is now retracing to support levels. Currently, BTC is trading around the $39k mark – same as last week.
Let’s take a look at the charts and see if we can predict BTC’s next move.
Bitcoin Price Analysis
The moving averages are all in a bearish configuration on our 4H Chart, with 50 SMA < 100 SMA < 200 SMA. Last week on 4/21 BTC’s price moved up but was rejected off the 200 SMA – a key level for any reversal. The 200 SMA will act as resistance, currently at $43k. BTC may be finding “wick” support at the $38.5k level. This is our local support area on short time-frames.
We see another short-term bullish divergence, as the RSI is once again oversold and stochastic shows signs of a bounce/reversal. This coincides with our identified $38.5k local support.
The daily moving averages are neutral, with the 50 SMA > 100 SMA, but 50 and 100 < 200 SMA. However, we can see a bearish divergence as the price has broken down beneath the lowest average. Local resistance is at 41k (100 SMA) and trend resistance is at the 200 SMA ($47.7k).
Our daily supports are previous bottoms, around $37.5k and $33k, respectively.
Our momentum indicators are also signaling a potential reversal soon, with the RSI nearing oversold levels and Stochastic bottoming out. Key to any mid-term trend reversal is breaking and holding above the resistance (100 SMA), which BTC failed to do last week.
The overall long-term weekly trend remains in tact, as BTC has not fallen below the 100 SMA. RSI looks neutral and Stochastic is breaking downward. BTC could touch off the 100 SMA before making a decision, currently at $35.7k.
Bitcoin Investor Sentiment
The Crypto FGI is reading “Extreme Fear” and has been all week. The FGI indicator is not so low as to signal total capitulation (<10), but times of extreme fear are good to begin dollar cost averaging into new positions. As they say, “buy when there’s blood in the streets.”
Bitcoin Fundamental Analysis
Investors are increasingly moving to risk-off positions as the global economy teeters on the edge of a recession. Paired with rampant inflation in the US and Europe, BTC’s status as a reserve asset is being tested.
News broke over the weekend that the Central African Republic unanimously passed a bill to recognize BTC as legal tender, making it the second country to officially do so. Though the CAR has a small GDP of about $2 Billion, it is another important domino to fall and encourages more countries to follow suit. Though BTC is in a bear market in the mid-term, long term it remains in a permanent bull market in USD terms.
Conclusion
Price analysis looks bearish on every time frame. BTC is certainly in a mid-term bear market, and global economic uncertainty is feeding the fires of FUD. However, bullish divergences can be seen on the 4H and Daily, and the weekly chart remains intact. Take extra caution when taking positions in a bear market, and remember to never invest more than you can afford to lose.
Support Zones:
- $38.5k
- $37k
- $35k
Resistance Zones
- $41k
- $43k
- $47.5k
Not investment advice. Do your own research.
