Bitcoin in an upward consolidation, indicating the calm before the storm

Bitcoin in an upward consolidation, indicating the calm before the storm

Bitcoin has been in a consolidation for quite some time, which is taking the character of an upward channel. Is it an accumulation, however, or a distribution? In this material we will look at the indicators and try to draw the right conclusions.

Bitcoin on the monthly chart

We conducted our previous analysis on the last day of October. For this reason, it is worth looking at Bitcoin’s situation first from the perspective of the monthly chart.

Well, the month, which historically is considered very bullish, actually managed to close extremely favorably for the king of cryptocurrencies. Indeed, the value of BTC increased by 28.5%, which is a fantastic result. We can observe a bullish cross between MA10 and MA20, with the shorter of the two indicated moving averages confirmed as support. In addition, the RSI managed to rise above the 56 level.

Thus, in the current situation, it is difficult to see any worrisome signals. What should catch our attention, however, is the price area in which BTC managed to find itself. Looking back, one gets the impression that this is a potential resistance zone, which was marked by clear candle closures observed in the summer of 2021.

Zdjęcie

Bitcoin on the weekly chart

On the weekly chart of BTC, compared to the corresponding period presented in the previous publication, it is difficult to see major changes. The movements we observe can be considered relatively small. Despite the fact that the price of Bitcoin rose by 1.45%, most indicators remained unmoved. However, it is worth noting that the RSI managed to rise slightly, reaching the level of 71. In turn, the price level of $32,300 was not directly tested as support. Nevertheless, Bitcoin’s value remains clearly above it, which in itself lends credence to the breakout.

A warning signal observed on the chart is the volume, which is clearly decreasing. This may be one of the first suggestions of an impending correction. However, it is worth remembering that in such a short period of time as this, it may be a mistaken signal. We have observed similar phenomena many times. They manifested themselves in periods of upward accumulation, which often ended in further upward breakouts.

Zdjęcie

Bitcoin on a daily chart

While the charts presented above look very bullish, the signals sent by the daily interval are quite different. There are many indications that a time of increased volatility is coming, which, moreover, may manifest itself in a correction of the Bitcoin price.

Here we can observe an upward channel forming. The interpretation of its structure in itself may be ambiguous. This is because we know that such formations are, as a rule, bearish formations. However, when they occur in a strong uptrend, they tend to reflect the so-called “upward accumulation”, which is ultimately a harbinger of further upward movements. To learn more about it, it is necessary to look at the indicators.

And it is here that a whole series of warning signals appear. The first of these is volume, which is clearly weakening. Let’s remember that we already see a similar situation on the weekly chart. The lower time interval, representing similar behavior, becomes, as it were, a confirmation of the earlier observations. In addition, a clear bearish RSI divergence is also taking shape.

Zdjęcie

ADX has reached 78 (very high) and is beginning to weaken. MACD, on the other hand, is experiencing a bearish cross.

Zdjęcie

Finally, it is also worth looking at the OBV indicator, which is also experiencing a bearish divergence.

Unfortunately, it is difficult to find any bullish indicators here. Thus, if the market is not haunted by any positive event, a correction, and a possible test of the $32,300 level as support, becomes increasingly likely.

Zdjęcie
Łukasz

Łukasz

Market Analyst

Disclaimer: Blockbulletin does not take accountability of investments based on the information of the website. We highly advice readers to make extensive research prior to any invest

Share this article

More analyses

All articles loaded
No more articles to load

More news

XRP

XRP outperforms Bitcoin and Ethereum

In the past week, XRP decisively outperformed its main rivals, Bitcoin (BTC) and Ethereum (ETH), in terms of capital flows. Moreover, it recorded an impressive $2.7 million…

Solana and Avalanche on the eye of investment funds

Two alternative coins, Solana (SOL) and Avalanche (AVAX), are gaining increasing interest and are successively attracting the attention of investment funds. Although bitcoin (BTC) remains the main…
All articles loaded
No more articles to load

Learn more

Cryptocurrency wallets

Cryptocurrency wallets

We talked about security when trading crypto assets in an article titled “Online security“. We also mentioned how important it…
hardware wallets

Cryptocurrency hardware wallets

From the article titled “Cryptocurrency wallets” you learned about the different types of wallets. They were briefly characterized there. Let’s…
Where to buy cryptocurrency brokers

Which cryptocurrency Brokers to use

In the article “Where to Buy Cryptocurrencies (Exchanges)“, we introduced you to which exchange platforms you can purchase cryptocurrencies on.…
Trading cryptocurrencies

Trading cryptocurrency

In the cryptocurrency market, you face many opportunities to invest in cryptocurrency or buy or sell cryptocurrency. If you want…
All articles loaded
No more articles to load

Latest news

All articles loaded
No more articles to load