NYXBT Bitcoin Weekly and Daily Charts; Descending Triangle; Gap; Potential Island Reversal

Bitcoin has bit the dust. It was wine and roses this time last year. Bitcoin was all the rage. Traders and investors were drunk on digital currency wine buying every new cyber coin offering that came along. Then the bottom fell out. Interestingly, as price topped this time last year, the indicators were negatively diverged (red lines) indicating a spankdown was on tap, which occurred, however, that MACD line was long and strong. Bitcoin may come up again at some point in the future, perhaps months or maybe years away, to those joyous late 2017 highs. Bitcoin returning to its former glory cannot be ruled out considering that long and strong MACD line in late 2017 early 2018.

But alas, bitcoin bites the bullet taking a major hit. Many enthusiasts have now turned their backs on the cybercurrencies indicative of a bottom. The red descending triangle is in play a bearish pattern. Price fell through the lower base line at 6K. The vertical side of the triangle is 3K points. Thus, the downside target is 3K.

The tight standard deviation bands squeezed-out the big downside move over the last six weeks (pink arrows). Tight bands predict that a huge sharp price move will occur but do not predict direction. It is like squeezing a tube of toothpaste tighter and tighter, and tighter, the cap finally flips open and pfffffffftttt, the toothpaste flies out super fast and only then do you see what direction it goes.

On the weekly, the two blue lines show a gap big enough to drive a truck through at 2800-3200. Price usually fills gaps at some point even if it takes a long time. Note all the gap-up moves in 2017 (blue circles). On the bitcoin bull side, look at that juicy gap up top at 12K-14K. Price will either fill the 2800-3200 gap at some point, or, may come down and gap-down through the gap; that would create an island reversal pattern. Note that bitcoin price is on an island above 3200.

Looking at the current price action, the daily chart shows the positive divergence (green lines) that bounced price higher along with the oversold conditions and lower band violation. Keystone could have posted this chart for yinz sooner. Price launches like a rocket off the possie d as would be expected and the stochastics still have upside juice for higher highs for price in the daily time frame. Bitcoin also tagged its middle band at 3741 after violating the lower band at 3088. The upper band at 4393 is on the table.

The weekly chart shows possie d for the indicators except for the RSI that is weak and bleak. As price made a low on the weekly basis, the RSI was still making a low. The RSI, however, is oversold and agreeable to a bounce in price. So the set-up shown on the daily chart was jiving with the weekly chart sans the RSI. The bounce in bitcoin occurs.

The daily chart hints at a couple more days of up. If the RSI moves above 50% into bull territory on the daily chart, bitcoin will likely have a few more days of up. The weak RSI on the weekly chart creates concern. Also, the triangle target at 3K has not been satisfied. The attractive bitcoin trade was last week to take advantage of the possie d on the daily chart.

Perhaps now it is best to wait to see if price weakens again because of that RSI on the weekly. The set-up in general is very nice for bitcoin going forward. A rally in bitcoin will likely jive with a strong relief rally in the broad stock market (on a weekly basis). If you are a die-hard proponent of bitcoin, you can likely begin scaling back in on the long side going forward. The RSI may not be an issue. The middle band at 5770 is an upside target on the weekly chart. Keystone does not own any bitcoin currently.

On the bitcoin monthly chart, there remains weakness. So in the weekly time frame, bitcoin is attractive but after a few weeks of joy and when everyone starts to feel good about cybercurrencies again, bitcoin will likely roll back over to the downside and print new lows in the months ahead. Sorry to break the bad news about the longer-term to the bitcoin enthusiasts. Signed, Gloomy Gus, a bitcoin analyst. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.