Why This Is The Most Important Bitcoin Chart You’ll See This Week

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Bit­coin price action is at an impasse. Bulls and bears are divid­ed as to what hap­pens next, lead­ing to months of con­sol­i­da­tion. It could all come down to the next few days, accord­ing to the most impor­tant BTCUSD price chart you’ll see this week.

The chart shows just how crit­i­cal the stale­mate in cryp­to mar­kets is cur­rent­ly, and why this week could be the end of the indecision.

Bitcoin Momentum Takes A Pause, But What’s Next?

In tech­ni­cal analy­sis, the veloc­i­ty of price increas­es or decreas­es can be mea­sured by momen­tum. Var­i­ous tools exist that get the job done, includ­ing the Mov­ing Aver­age Con­ver­gence Diver­gence indi­ca­tor. The tool is designed to give over­bought and over­sold sig­nals, plus buy and sell sig­nals based on crossovers of the sig­nal and MACD lines. Pass­ing through the zero line is also an indi­ca­tion of momen­tum strength­en­ing, as well as the under­ly­ing trend.

It is for all these rea­sons and more that the chart below is so impor­tant. The chart con­sists of BTCUSD on the one-week time­frame. Under­neath the price action is the LMACD – a log­a­rith­mic ver­sion of the MACD. The log ver­sion allows more com­par­a­tive analy­sis between long-term cycles. At just a glance, it is easy to see that the tool appears ready to cross down­ward, gen­er­at­ing a sell signal.

BTCUSD_2023-05-31_07-31-31

The inflection point is visible in the LMACD | BTCUSD on TradingView.com

Below The Zero Line: Doom Or Redemption?

What’s worse is the fact the sell sig­nal will occur along­side a fail­ure to hold above the zero line on the LMACD. Such a sign of momen­tum fail­ure would more than like­ly lead to a retest of cur­rent bear mar­ket lows across cryp­to. How­ev­er, the D in the indicator’s name stands for “diver­gence.” Sig­nals are gen­er­at­ed based on the tool con­verg­ing or diverg­ing. Diverg­ing upward in Bit­coin, could send the cryp­to mar­ket blast­ing off high­er instead.

But beware. It is pos­si­ble that both sit­u­a­tions could hap­pen before the week’s end. The LMACD could cross down and turn the his­togram red for the first time in 2023 and shake out those eager to jump the gun on the sell sig­nal. After the shake­out, the tool could diverge up before close and con­tin­ue to push momen­tum and price to new highs. Alter­na­tive­ly, the tool could diverge upward at this inflec­tion point, only to lat­er cross back down. What is for cer­tain is that the cur­rent lack of a deci­sion in price direc­tion is about to end, accord­ing to the LMACD.

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