Bullish signals and momentum shifts hint at a trend reversal. Is it time to position for upside?
The tide may be turning for BTC/USD.
With buyers lining up to buy dips below $108,000 last week, delivering an engulfing candle on Thursday, the bullish signals continue to pile up for bitcoin. Earlier today, the price smashed through the downtrend from the record highs, helped by an extremely elevated risk appetite that has seen major equity indices across Asia surge to record levels.
With bullish momentum signals being triggered across an increasing number of timeframes, the path of least resistance may now be higher, not lower.
The chart below is split into two panes, with the larger one on the left looking at BTC/USD price action using an hourly tick while the smaller one on the right is the daily. This not only makes it easier to see relevant levels for shorter timeframes but also longer-term signals and trends, providing a decent indicator of where directional risks may lie. Right now, the latter suggests the bearish trend seen this month may have run its course.
Source: TradingView
Prior to the downtrend break seen earlier today, bearish moves beneath $108,000 were continuously bought over the past fortnight. The last iteration on Thursday delivered an engulfing candle, with the bullish signal proving accurate given the price action since.
The momentum picture on the daily timeframe is also shifting, with RSI (14) trending higher above 50, delivering an increasingly bullish signal. MACD has yet to confirm but is rapidly approaching the signal line from below, on track to deliver a crossover in negative territory that reinforces the view that the tide may be turning.
Turning to the hourly chart, it gives a sense of the levels to consider when assessing potential setups. Bulls made quick work of resistance above $113,500 early in the session, pushing the price to multi-week highs. Above where BTC/USD currently trades, resistance is located at $116,000, a level that capped the price over two days earlier this month.
On the downside, $113,500 may now revert to offering support, providing a potential entry level for bulls where longs could be established above with a stop beneath for protection. Given the price is struggling above $115,000 right now, a pullback is not out of the realm of possibility in the short term.
If the bullish trend seen earlier in the session resumes, $116,000 is another level that could be used to establish positions, offering both bullish and bearish setups depending on how the price interacts with it should it get there. A clean break above would allow for longs to be set with a stop beneath, targeting resistance at $118,000. But if it can’t break above the level, another option would be to set shorts below with a stop above, targeting either $114,400 where bids were noted earlier today, or even $113,500.
RSI (14) sits above 70, indicating overbought conditions on the hourly chart that warn of near-term reversal risk. MACD continues to deliver a bullish message, crossing the signal line from below in positive territory earlier before trending higher. Unless you’re an ultra short-term scalper, the preference would be to buy dips given the macro environment.
