Last week I touched upon the technical aspects of the cryptocurrency market, and this
week I am going to stick with a similar theme as Bitcoin is on the move higher
again.
The only difference from last week's article is that I will be discussing
crypto in a much more shorter time frame.
I guess I shouldn't assume that everyone is a medium-term low-frequency trader
like me, as near and short-term crypto commentary seems to be very popular.
Source: TradingView.com
Starting with the Crypto Total Market Cap, and during this week's webinar, I made
that point that while the CTMC is probably headed lower the short-term bullish
divergence on the chart certainly alludes to a recovery towards at least $1.59
trillion.
As you can see by the short-term chart the CTMC has fulfilled this prediction. So what
next? And is there any more significant short-term divergence on the
chart?
Upon a thorough inspection of all the lower time frames I can deduce that there is
one area of bullish divergence left above $1.59 trillion which still needs to be
reversed.
Source: TradingView.com
The 5-minute time frame shows hidden bullish MACD price divergence around the $1.66
trillion area which still needs to be unravelled.
Do note that the 5-minute time frame is remarkable in the fact that it usually
unravels much quicker than offer higher time frames.
The obvious example is that any type of divergence on the 4-hour time frame would
naturally unravel quicker than divergence say on the daily or weekly time frames.
Source: Bullish Divergence Example (Meta4platform)
Bearing in mind the above, we could speculate that $1.66 trillion being the further
extension of the market recovery could coincide with BTC getting as high as $44,600
before being sold again.
But what of the actual Bitcoin chart itself? do the lower time frames currently show any
hidden MACD divergence or any types of divergence that need to be reversed?
Source: TradingView.com
The answer is an empathic Yes! There is a significant amount of bullish MACD price
divergence on the 5-minute time frame currently that extends upwards towards
$43,300.
Now to the interesting part. Bitcoin has bullish divergence on the 1-minute time frame
extending just short of $45,000. Around $44,900 to be exact.
Source: TradingView.com
This is very close to the exact area where I would be prepared to "go short"
and look for a bearish swing back to new lows for the year.
Above $45,000 I currently cannot really see any notable bullish MACD divergence on the
1-minute or 5-minute time frames. This could imply that the market is going to roll over
heavily from this area.
If you read my Midwinter Capital Daily newsletter you will know that Bitcoin is likely facing a
do-or-die moment around $44,600 sooner rather than later. A clear break of this area and
$47,000 to $48,000 are the next target.
Source: TradingView.com
Overall, an interesting few weeks lay ahead if your short-term bullish. Even more
so since Midwinter Capital issued a Bitcoin buy signal earlier this week.
