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Are $ 10,000 thousand a bullish trap? Why Bitcoin’s price is likely to go down now

May 31, 2020

The Bitcoin (BTC) price was trading sideways again last week, and the price movements between bulls and bears proved to be the same. But do the scenarios for Bitcoin seem possible as we approach May?

Let’s take a look at what happens to the largest cryptocurrency by market cap, BTC.

Are $ 10,000 thousand a bullish trap? Why Bitcoin’s price is likely to go down nowAre $ 10,000 thousand a bullish trap? Why Bitcoin’s price is likely to go down now

Daily performance of the cryptocurrency market. Source: Coin360.com

A bullish monthly candle closes

1-month chart of the BTC / USD pair. Source: TensorCharts

From monthly, We can see that Bitcoin gained almost 25% in value in May. It’s always nice to see. Since the sale on March 12, the long-term hodlers have not been enthusiastic yet.

However, as the one-month candle opens above the Fibonacci retracement level of 0.382, an upward move toward $ 13,700,618 is something to look forward to. That said, let’s get no further, first we have to collect $ 11,800 and you can’t ignore that a downward move is always an option for the king of cryptocurrencies too.

The way things are If June were bearish, you would place some buy orders with a pullback between $ 7,400 and $ 7,600, and I’ll explain that today.

The monthly moving average convergence / divergence (MACD) is bullish

Monthly MACD of the BTC / USD pair. Source: TradingView

The monthly convergence / divergence moving average (MACD) indicator is configured for a bullish crossover. This suggests a return of upward momentum for Bitcoin, and history shows that this is an important buy signal for investors.

This is also reflected in the weekly MACD, which crossed bullishly in early May. The way things are now Bitcoin looks strong in the higher timeframes.

However, for more immediate price movement expectations, we need to dig deeper into the lower timeframes to see what the next week has in store for us.

Bearish divergence in daily outlook

Daily MACD of the BTC / USD pair. Source: TradingView

Not only is Bitcoin bullish weekly and monthly, it also appears to be ready for a bullish crossover on the daily MACD. It almost seems like a trap, because such conditions in this indicator are what dreams are made of.

However, given the upward trend in prices and the downward trend of the indicator, we are still showing a waning divergence, and this is by no means a bullish sign. This tells us that a pullback will happen, and a look at the lower timeframes can show us where it could be.

Descending channel opening

BTC / USD pair daily chart. Source: TradingView

If we look at the daily timeframe, we can see that Bitcoin fell below the previous uptrend line last week, and since then the price has continued to change during the previous support level, making it difficult to determine which direction the price is going to take .

This has triggered a new downward channel in the charts, placing $ 9,700 as resistance, $ 8,700 as middle level and $ 7,400 as support.

After such a sharp rise in prices in the past eight weeks, a withdrawal is inevitable. However, I would expect this to be short-lived due to the higher dynamics in the higher frames.

Bearish scenario

BTC / USD pair daily chart. Source: TradingView

Using Fibonacci retracement levels on the daily chart gives us an idea of ​​the levels that Bitcoin is expected to reach when it is traced back towards the center of the descending channel.

This shows that support at $ 8,613 can be found with key areas for recovery at $ 9,313 (.382) and $ 9,046 (.618).

When the price drops below $ 8,613 again, $ 7,400 will only appear as a realistic lower limit.

Bullish scenario

From a bullish perspective, breaking from USD 9,800 could bring Bitcoin to USD 11,000 and then USD 13,800.

The opinions expressed here are exclusively those of @official and do not necessarily reflect Cointelegraph’s views. Every investment and trade movement involves risks. You have to do your own research when making a decision.