Bitcoin: Signs of Strong Support 1D (May 25)

25 may 2020

X Force Global Analysis:


Since 10k resistance levels, we have mentioned the probability of a bearish scenario in which we see a correction from the bullish rally that led to a +160% move up. In this analysis, we analyze the current situation of the market suggested by technical indicators, to rationally assess the most probable case for Bitcoin.

Bullish Evidence

- The first thing we can notice is the ascending trend line support, marked by the dotted orange line
- We have corrected from the 10k resistance, approaching this ascending trend line that has been intact since 3k levels
- The next important thing to notice is the hidden bullish divergence we are spotting on the daily
- We are seeing prices form higher lows, while indicators form lower lows
- The Relative Strength Index (RSI) shows a clear lower low formation
- We are approaching the 0.236 Fibonacci support, which we have bounced on previously
- A possible formation based on the Fib support and the hidden bullish divergence would be a formation of a double bottom pattern, re-testing the 10K resistance
- We are approaching the bottom envelope support, which indicates potentiality for Bitcoin possibly reaching under extended regions


Bearish Evidence

- However, it's also important to note that the trend is clearly bearish, as it has created technical lower highs
- The RSI also shows the formation of lower highs
- The Moving Average Convergence Divergence (MACD) shows increasing bearish histograms
- The resistance at 10K levels remains strong, as BItcoin has failed to break above despite testing it multiple times

Market Sentiment:

Long short ratios remain at 67 to 33, with significantly more long positions than short positions still, despite the huge drop from 10K levels to 8.8K. The market sentiment is still dominantly bullish, and this is mostly due to high anticipations regarding the halving event.


What We Believe

While we are at strong support for Bitcoin, with technicals indicating potentiality for another test of the significant resistance zones, there is no clear confirmation for a bullish trend. In fact, should we break and close below the ascending trend line support, it's highly likely that we will move to test new lows.

Trade Safe.