NYXBT Bitcoin Weekly Chart; H&S; Oversold; Positive Divergence Setting-Up; Testing 200-Week MA at 22332

Keystone posted the H&S (head and shoulders) pattern for bitcoin previously. The neckline failed at 32,000. The head is at 68K the all-time record high. The difference is 36K so the downside target would be zero. Wild charts like this, however, typically play out where weakness and the H&S spankdown occurs, but price simply seeks support which is at 12K and 10K.

Putting the doom and gloom aside for a second, the near-term looks good on the weekly basis. The blue circles show where bitcoin previously bounced from its important long-term 200-wk MA trend line and it may repeat this fractal currently with the 200-wk MA at 22332.

The green lines show the positive divergence at play going forward. The indicators are set-up for a multi-week rally ahead sans the pesky MACD. However, if bitcoin rallies this week, the MACD line may finish the week higher and exhibit possie d identifying the bottom as this week. If not, the bottom should be in next week and a multi-week rally would begin.

When an H&S fails, price typically comes back up for the back kiss of the neckline. The multi-week rally that is likely beginning may take bitcoin back to 30K. However, look at the neckline closely. The best fit it the thick red line at 32K but the case can be made that the neck is actually at 30K. Note that price failed at the 32K neck, and performed a mini back kiss back to 32K then collapsed. Was that tiny back test enough or will price have to perform a meatier back kiss and climb back to the 30K level over the coming weeks? Probably the latter.

The near-term (days and next few weeks) looks good for bitcoin and all its derivatives but bring up the monthly chart. It remains ugly with chart indicators weak and bleak. Therefore, the potential bitcoin rally that is beginning now, or in the coming days, will run for a month but the negativity on the monthly chart will reexert itself and smack the digital currency back to the ground. 

So the proposed multi-week rally can be played long for nimble traders with derivatives such as RIOT, OBTC, BITW, GBTC, MSTR, MARA and COIN. This is highly speculative trading so you are wading in the deep end of the pool. The trade should be monitored because when the weekly rally fizzles, and you will know because the chart will form neggie d, get out. Probably from late July or August forward, bitcoin will take its next tumble and the 10K level is a reasonable destination perhaps as the year comes to an end. Keystone owns some RIOT on the long side currently. 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.

Note Added 8:17 AM EST: Bitcoin 20690.

Note Added Saturday, 6/25/22: For last week, bitcoin trades between 20501 and 21521 now trading at 21180. Watch the 200-wk MA at 22334; bitcoin may migrate there this weekend where it will have to make a bounce or die decision at the critical support/resistance level.