Bitcoin surprises this time and very quickly breaks out of the downward channel formation with the top. There are reasons to believe that this formation was not filled, and the breakout is false. However, it is not the channel that raises the greatest doubts, but the horizontal resistance and the reaction to the convergence of the moving averages.
Bitcoin on the monthly chart
September is behind us. The mythical month of declines was not so terrible this time, as it turns out that the leading cryptocurrency managed to gain value during it. Thus, looking at the chart, we see increases of 4.0%. The MACD thus managed to maintain a bullish momentum. It is interesting to note a very rare phenomenon that manifests itself in a bullish cross between the 10-month and 20-month moving averages. We have marked them in yellow and green, respectively. MA10 at this has been confirmed as support, and MA20 is now a candidate for the same role. The weakest element on the chart, meanwhile, is the RSI, which, while showing no significant divergence, is just below significant resistance at 49.
Meanwhile, the equally mythical October begins, and with it the fourth quarter of the year. This is the period that has historically presented itself most often as one of the best for Bitcoin and the entire cryptocurrency market. We will see in the near future whether this rule will be sustained.
Bitcoin on the weekly chart
Even stronger movement than on the monthly chart, we could see in the case of BTC on the weekly chart. For here the increases amounted to as much as 6.65%. Thanks to this, the RSI managed to rise above the level of 54. The indicator has been accompanied on this occasion for a long time by a bullish RSI divergence. The effect of the recent increases, MACD managed to maintain bullish momentum. Despite this movement, the horizontal resistance level remained unchanged and is formed by the value of $28,600. The support level is also unchanged, at exactly $24,900.
Bitcoin on a one-day chart
Can the potential formation of the descending channel from which Bitcoin has broken out be considered correct? We have some doubts about this. From a technical point of view, formations of this type require at least three points of contact between the price, both with resistance and with support. In this case, we do not observe this phenomenon. On the one hand, this is not surprising, since the cryptocurrency market is quite young, which means that it very often moves faster than the assets of traditional finance. On the other hand, however, we are still in the midst of a bear market or accumulation period. Therefore, this is not a time of instantaneous breakouts, characteristic of a bull market. For this reason, we assume that the breakout is false or that the formation cannot be considered reliable.
It is also worth noting that at the time of its breakout a CME gap was formed, located slightly below the $27,000 level. These gaps like to be filled, although this does not always happen.
The continuation of Bitcoin’s rise, on the other hand, encountered very strong resistance at a level we have been seeing for a long time. We are referring to USD 28,600. The rejection is clean and very strong. The picture is completed by the 100-day SMA (yellow line), and the 200-day SMA (green line). It is clear that the Bitcoin price has failed to close above either of them. This situation argues for a possible deeper downward movement. If it occurs, it is worth looking out for divergence. For the time being, however, most indicators remain neutral.