BTC price attempted to break out of the range before retesting underlying support. Is a trend change imminent or will the price continue to consolidate?
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This week Bitcoin
BTC
dial down
$21,186
The price has perked up, rising to $21,000 on October 26. This has led to a handful of traders proclaiming that the bottom could be or that BTC is entering the next phase of a Wyckoff-like technical structure, a series breakout, or some kind of entry. . support flip resistance.
Before it turns bullish and goes 10x long, let’s go back to an earlier analysis to see if anything has changed in the Bitcoin market structure and if the recent wave of bullish momentum is indicative of a broader trend reversal.
When the last update was published on September 30, Bitcoin was hovering around $19,600, which is still within the limits of the last 136 days of price action. At the time, I had identified bullish divergences in the weekly relative strength index (RSI) and the moving average confluence divergence (MACD). There were also a handful of potential “bottoming” signals coming from multiple on-chain indicators that were at multi-year lows.
Let’s see how things look now.
Bollinger Bands are tight
Bollinger Bands on the daily time frame remain tight, and this week’s surge to $21,000 was the expansion or spike in volatility that most traders were expecting. According to the bull run, after breaking the upper arm, price pulled back to test the midline/midband (20MA) as support.
Despite the strength of the move, the price remains closed below the 200-MA (black line), and it is currently unclear if the 20-MA now serves as support for Bitcoin price.
BTC/USD daily chart with Bollinger Bands. Source: TradingView
After hitting a near-record low of 25.7, the weekly RSI continues to rise and the bullish divergence identified in the previous analysis is still in play. The weekly BTC MACD is also trending similarly.
On the same chart, we can see that the last weekly candlestick is on track to create a weekly high. If the candlestick closes above the range high of the last five weeks and you see the price continue in the coming weeks with a daily or weekly close above $22,800, this could be the effect of a trend reversal.
BTC/USD weekly chart. Source: TradingView
On the daily time frame, the BTC Guppy Multiple Moving Average (GMMA or Super Guppy) indicator is frowning. There is a compression of the short-term moving averages and they are converging with the long-term moving averages, which usually indicates an impending directional move or in some cases a macro trend reversal.
The chart directly shows the volatility of BTC/USD. Source: TradingView
For the past few weeks, Bitcoin’s “record low volatility” has been the talk of the town and using Bollinger Bands, GMMA and BVOL, price tightening points to an expansion, but which direction remains a mystery.
Bitcoin has been trading in the $18,600-$24,500 range for 36 days and from a technical analysis perspective, the price remains near the middle of that range. The move to $21,000 did not set a significant daily high or break out of the current range, which is essentially a sideways cut.
Price is holding above the 20-day moving average for now, but we have yet to see the 20-MA cross above the 50-MA, and most of the Oct 26 rally has retraced to the $20,000 low .
The chart directly shows the volatility of BTC/USD. Source: TradingView
A more compelling development would involve Bitcoin breaking out of the current range block to test the 200-MA at $24,800 and eventually attempt to break out of the moving average to support.
A further extension of the $29,000-$35,000 range would inspire bullish confidence for a longer period
