Bitcoin Technical Analysis – 5th October
Since last week’s analysis, Bitcoin has moved sideways. The price action of this Bitcoin Technical Analysis is quite dull, and swing traders are losing patience.
If you struggle to make profits during low volatility periods, we recommend you to read this article below:
Today’s Analysis will be succinct. We’ll move over the daily chart, then perform a market sentiment analysis and then finish on the bullish news of the week.
Bitcoin Daily Chart Analysis
The tools used for this analysis are the following:
- Support and Resistance Levels
- MAs & EMAs
You can learn more about how to use those indicators in this Bitcoin Technical Analysis Guide.
Support and Resistance Levels
First, we can analyze the support and resistance levels. You can notice that $11,125 has been acting like a support level before Bitcoin’s Price went down, and it became a level of resistance, rejecting the price after the first touch.
We can notice the support trendline, coming from May 2020, that has been pushing the price up for a few months.
Finally, we have identified a channel, that you can monitor with 2 descending lines, linking swing tops and swing lows. If you are an advanced trader, you will question my higher trendline, since the second “swing top” is not even one. Indeed, this level is not showing as a swing top on the Daily Chart but has proven to be one in lower timeframes. Thus, I will be considering the line connecting those swing tops as a possible resistance trendline.
RSI (Relative Strength Index)
The RSI (Relative Strength Index) is useful here to monitor the state of the market and possibly look for trend reversal with Regular Divergences.
However, the market doesn’t show any oversold areas. There isn’t any divergence as well and the RSI seems to be trapped below 50.
This shows that the Daily trend shows signs of weaknesses. We cannot conclude that the trend is bearish because we haven’t made any Lower Low on the chart yet, however, some of the major MA starts reversing and rejecting the price’s pushes.
On the daily chart, we displayed MA50 and EMA200.
Those Moving Averages are not displayed randomly. Indeed, as you can see, MA50 has been a reliable short term trend indicator those past few months.
Moving slowlier, the EMA200 has been supporting the uptrend since the breakout in May.
BTC price is slowly moving sideways between both of them.
ADX (Average Directional Index)
I believe this is the first time I am showing you this indicator. This indicator is staying under the radars in cryptocurrencies because it is extremely hard to trade it.
On the chart, you can monitor 2 ADX curves. The Daily ADX, which is the slowliest and the smoothest, and the H4 ADX. When the ADX goes above 25, it means the direction of the trend is strong. The color of the line & background gives you the direction of the trend.
You can see here both of the ADX being under 25. This means that there is no strong trend here.
Bitcoin Market Sentiment Analysis
Last week, CFTC Charged BitMEX Owners with Illegally Operating a Cryptocurrency Derivatives Trading Platform.
Most of the users left the platform and thus the analysis of the Bitmex Open Interest is not relevant anymore.
Since the OI has been going down, this would be relevant to conclude that there aren’t many positions to “rekt” anymore.
Market Makers have no choice than waiting for people to take positions on the market.
Since the last moves were in the downside direction, a more likely strategy would be to create a FOMO move and make people take a position in LONGS.
As you can see, CME Futures Open Interest has been moving down as well.
My conclusion on this is that Bitcoin will move down on a daily trend until there is a massive green daily candle that will make the OI grow and people FOMO.