Bitcoin TA: RSI divergence and MACD suggest a reversal is underway

Bitcoin Technical Analysis TA for 12/9/2018

It’s been nearly a month now since Bitcoin first broke its major historical support around $5800, which triggered the most recent bear run down to the $3000 range (-46%). Now the bulls appear to be stepping in as RSI divergence and MACD suggest a temporary bottom may be in and we could see a rally up to some key levels.

Weekly Chart

Bitcoin needs to stay above the Weekly 233 EMA.

Looking at the weekly chart, price has found support around the 233 EMA. This was a natural target that was hit beautifully, now the question is will this support hold? The weekly RSI is currently trending under 30 which is the lowest it’s been since early 2015, this suggests that Bitcoin is extremely oversold on the weekly chart which suggests a wonderful buying opportunity.

Bitcoin needs to stay above the Weekly 233 EMA and a bounce off this level would be expected as we seen with the 55 EMA in April 2018. The historical significance of these levels can’t be ignored but the weekly MACD suggests that strong momentum to the downside still remains.

Daily Chart

A uptrend could see targets at the $4200 or $5000 levels, RSI resistance and MACD will offer indication if that scenario plays out.

The daily chart shows significant divergence between price action and momentum with a possible bottom failure swing almost complete on the 13 day RSI. Values on the MACD indicator are nearly crossing zero with a positive histogram on the daily as RSI moves above the 30 level and works on breaking the previous high and completing the bottom failure swing.

Candlestick analysis of the past few days show a series of bullish candles that indicate price is looking to trend upwards at least for the short term. Some potential upside targets include the 34 daily EMA around $4100 or the 55 EMA around $5000.

The 8 week EMA offers a good midpoint between the daily targets at $4750, I will be keeping an eye on the RSI to see what it does around the 50 and 60 levels to determine whether price will break or bounce off these targets.

Bottom Line

Bitcoin needs to stay above the 233 weekly EMA to maintain any kind of dignity but a bear trap isn’t out of the question. Positive MACD levels and divergence on the RSI after a huge sell off suggest a short term bottom is near as price goes to retest some key EMA levels on the upside.