39.95% – this is the growth that Bitcoin boasted last month. This is only 4.1% weaker than the record January 2013 so far. Meanwhile, February is beginning, and with it comes an important event that will undoubtedly affect volatility.
Bitcoin on the monthly chart
As every month, we begin our analysis by presenting Bitcoin’s situation on the monthly chart. As we mentioned in the introduction, January, which just ended, was the second best January in the cryptocurrency’s history. The increase of 39.95% allowed the formation of the so-called engulfing candle. In itself, it is a very bullish signal and in the long term suggests a continuation of the upward movement. The observed price action was supported by a bullish RSI divergence, which has been forming on the chart for a very long time. MACD also remained bullish for obvious reasons. However, it is important to look at the details. The area in which the month closed is the local peak, which is resistance (dashed line). The drawn taper indicates a temporary rejection. Expect, therefore, a difficult struggle to regain it. For the sake of coolness, it is also worth mentioning that at the moment a higher peak on the chart has not yet been formed, which means that the trend on a monthly basis has still not reversed.
Bitcoin on the weekly chart
Bitcoin’s situation on the weekly chart becomes even more ambiguous. Here we see a clear increase in the value of the leading cryptocurrency, amounting to 4.55%. The RSI has managed to rise above the 58 level, but at the same time it is forming a clear bearish divergence. We have already marked it in the past week, suggesting that it is likely to widen. This is also happening. In the meantime, volumes are falling, which is a negative signal.
Basically, not much has changed since last week. Moreover, the much-awaited death cross between the 50-week and 200-week SMAs has still not occurred. Nevertheless, if in the current week, the price does not make a significant upward breakout, this event will be inevitable. Due to the fact that it has not yet occurred in the history of Bitcoin, we will relate it to traditional markets. We will then examine what consequences this cross brought with it.
Bitcoin on the daily chart
The daily chart, of all those indicated, presents the most bearish picture. Recorded since the beginning of the year, the huge increase in the value of BTC, has so far not lived to see any correction. Thus, many indicators are experiencing significant overvaluation, and the price movement itself is showing signs of exhaustion. Starting from the top, we see a clear bearish divergence. It is perfectly illustrated by the juxtaposition with the RSI indicator. This one, in addition, shapes this divergence in the overbought zone, which gives it even more strength. MACD has just made a bearish cross and is heading downward. In addition, the ADX indicator (blue line at the bottom of the screen) has risen above the 73 level (the highest in the last 4 years) and is making a retracement. Recall that the ADX is an indicator that tells us about the strength of the trend. Its current behavior clearly indicates a significant weakening of the movement.
In the event of a price retreat, it is worth watching the behavior around the CME gap, formed in the middle of the past month. In doing so, remember that the 200-day SMA is also located there. In turn, a possible denial of the indices, by triggering an upward movement, could take BTC to a value close to $25,000.
Let’s not forget that February 1, is the day of the FOMC meeting. Thus, another interest rate hike is expected. Volatility is therefore expected, which will most likely answer the question of whether the local trend will be sustained or whether there will be a change.