This is a daily analysis from CoinDesk Analyst and Chartered Market Technician Omkar Godbole.
Probably everyone has heard this phrase. “Once is a coincidence, twice is a coincidence, three times is a pattern.”
This old adage applies perfectly to Bitcoin as well. BTC$114,828.82 Friday’s selloff marked the third time in the market that bulls have failed to sustain gains above the key trend line drawn from the highs of 2017 and 2021, raising the possibility of further declines below $100,000.
The repeated failure to sustain above this level highlights the persistence of resistance and suggests that the trend line is now the key battleground that will likely define the limits of bullish strength in this cycle. A month ago, CoinDesk highlighted trendline resistance and noted that there were two occasions when bulls were unable to sustain gains above it.
Monthly chart of BTC in candlestick format. (Trading View)
The long wicks of the July, August and October candlesticks indicate bull fatigue above the trend line.
At the same time, the MACD histogram on the monthly chart, while still positive, is lower than the December-January rally when BTC first broke $100,000, indicating that the upward momentum is weakening. MACD, a moving average-based indicator, is widely used to identify trend changes and trend strength.
The daily chart below also shows a bearish picture.
This is a daily chart of BTC. (Trading View)
The sharp reversal from the channel resistance expansion, combined with the negative readings in both the standard (12, 26, 9) and long term (50, 100, 9) MACD histograms, indicates that the path of least resistance is descending.
The longer period histogram, which uses 50- and 100-day EMAs and a 9-day EMA to smooth the signal, is significantly slower and less sensitive than the default setting, but is better at filtering out short-term market noise.
Combined, the monthly and daily charts suggest there is room for a fall to sub-$100,000 levels, a test of the lower bound of the expanding triangle. On the decline, the 200-day simple moving average of $107,000 could also provide support.
The bulls will need to break above $121,800 to reverse the series of lower highs and reverse the bearish outlook. At the time of writing, BTC was trading at $114,800, according to CoinDesk data.
