The highly volatile Bitcoin has been trading in a narrow range of $215-235 for the past two weeks, leaving the market participants with directional bets eager and anxious to know the future course of action.
Bitcoin has fallen roughly 10% in this month until now and I expect the digital currency to plummet to sub-$200 levels in May. Each Bitcoin is currently worth $223.78.
Several technical indicators and the chart structure point to bearish connotations for Bitcoin.
Bitcoin Chart Structure – As can be seen from the BTC/USD daily chart above, Bitcoin has been trading in a downward channel since mid-March. The trading community must note that the virtual currency is currently near the resistance level, marked as Resistance 1. Bitcoin recently came down after facing a similar resistance at a higher level, Resistance 2 near $235. Unless the Bitcoin markets find a positive trigger to break above this range, there is a high probability that we may well revisit $180 in May.
Momentum – The Momentum indicator is at the cusp of entering into the negative territory. With the latest value coming in at 1.2400, bulls definitely have to up their game if they are to avoid an embarrassment at the hands of the bears. If the momentum reading dips into the sub-zero region, especially now when the price is near a strong resistance, bears may stage an emphatic comeback.
Relative Strength Index – That Bitcoin lacks strength is also confirmed by the latest RSI reading of 41.9436.
MACD – The MACD and the Signal Line, both are deep in red with values of -5.6008 and -6.2255 respectively. The Histogram is barely positive at 0.6247.
Having stated the above, I would recommend that only short positions be considered at the current level by placing a stop-loss just above Resistance 1 (closing basis). The primary downside target is $200 while the final target is $180.
Bitcoin has fallen roughly 10% in this month until now and I expect the digital currency to plummet to sub-$200 levels in May . Each Bitcoin is currently worth $223.78. Image: https://www.tradingview.com/x/0xd9grZK/ Several technical indicators and the chart structure […]