What do the Charts Tell us About Bitcoin Price Action?
The year 2021 has been quite a ride for crypto investors and traders. Since December 2020, Bitcoin has seen a more than 250% rise in its value. The investors turned overbullish and there was an atmosphere of extreme greed. With every correction in price, people believed that Bitcoin will recover within a week and make new highs.
What Happened to Bitcoin in May 2021?
If we look at the fear and greed index of the crypto market, it is evident that before May, there was a sense of extreme greed in the market. Despite the fact, RSI and MACD formed lower lows, the prices kept rising. The fear and greed index even surpassed level 90 during February and March. Now the index is hovering below 30.
If we look at the Bitcoin price chart in a daily timeframe, since mid-February Bitcoin was making higher highs whereas its RSI and MACD were continuously making lower lows. This divergence was a signal that a correction is due.
No one expected the correction to be so lethal. With such bullish sentiments in the market, it was expected that Bitcoin would retest the 21 Weekly EMA and bounce back to higher highs. Unfortunately, when the investors get too greedy, the market shakes off the weak hands. This is what happened. Instead, finding support at 21 Weekly EMAs, it went past 21 and 34 Weekly EMAs both, finally finding Support at 55 EMA currently.
Where is Bitcoin Hanging Now?
55 Weekly EMA is represented by the yellow line, 34 by green, 55 by saffron, and 89 by the dark blue line in the above Weekly price chart.
In the Weekly time frame, Bitcoin is hanging just above the 55 EMA. With such Bearish sentiments in the market, if 55 EMA breaks, we can see the price of Bitcoin plummeting down to the levels of 25,000$ to 27,500$, near to 89 Weekly EMA. 89 EMA can be considered the last ray of hope for Bitcoin holders. A similar situation can be seen in the monthly time frame.
If we closely look at the Bitcoin price action in the monthly timeframe, it is visible that the purple line (8 Monthly EMA) supports the bull cycle. Whenever Bitcoin has fallen below the 8 EMA, it is the beginning of the bear season. At this moment, BTC has broken the support band of 8 EMA and is going to test 20 EMA, from where we can expect a short bounce. It will be interesting to see if BTC price can again become stable above the 8 EMA after finding support at 20 EMA, or it will be the start of a bear cycle (Probably a short bear cycle).
Probable BTC Price Action
What can happen next? Well, as per the previous data and the current price action, BTC will probably test the 20 EMA in the monthly time frame (Point 1). An expected bounce will bring the prices close to Point 2. After facing rejection from Point 2, the prices can face a downward price action till Point 3. Point 3 will be the end of the bear trend which we are in right now. After Point 3, BTC will have enough fuel to make new highs. That will be the start of the last phase of the bull cycle.
Expected Point 1: 25,000$ to 27,000$
Expected Point 2: 45,000$ to 50,000$
Expected Point 3: 30,000$ to 34,000$
Expected Point 4: Above 100,000$
For more amazing content on Cryptocurrency follow Cryptocase on:-
Instagram
Pinterest
Note- Cryptocase is not a financial advisor and the above is not financial advice. The information is solely for educational & informational purposes only. Cryptocase is and shall not be responsible for any profit or loss incurred by you
