Bitcoin was seen over the weekend trading below a critical price support level as the broader market continued to weaken. Traders’ confidence in the asset remained rather low given the selling pressure in the market.
Prices have now fallen on the news of the Federal Reserve’s rate hike. Bitcoin has also shown booking profits on the charts. This may be the reason for the lower prices even more. If the asset fails to stay above the $38,000 price level, a short-term crash may occur. Bitcoin is currently trading in a downtrend, however, the charts have something else to say. Several bullish divergences have been spotted on the charts in different time frames.
Bullish divergences equate to bullish sentiment. This means that in the long-term, Bitcoin can recover and trade above the immediate resistance levels.
Bitcoin Price Analysis: 1 Day Chart
Bitcoin is valued at $38956 on the 1-day chart. Image source: BTC/USD on TradingView
Bitcoin was trading at $38,956 at the time of writing. The immediate resistance for the coin stood at $40K. A drop from the current price level could mean that BTC will trade near the $38,000 level. A drop from $38,000 could lead to BTC trading at $31,000. In the event of a price reversal after the breakout of $40,000, BTC could point to $42,000.
Bitcoin volume has decreased in the past few trading sessions, however, green bars are seen. This could mean the return of buying pressure to the market.
Technical analysis: 1 day chart
Bitcoin has noticed a sharp decrease in purchasing power on its intraday chart. Image source: BTC/USD on TradingView
BTC price is seen trading below the 20-SMA line, which means more selling pressure. The price momentum was driven by the sellers in the market. Increased buying pressure could push prices above the 20-SMA line and then the 50-SMA line.
On the RSI, the indicator is seen below the 50 line. A reading below the 50 line means a decrease in buying power. Earnings booking caused further downside buying pressure. Purchasing Power made attempts to recover but failed each time. But at the time of writing, there has been a small uptrend which means the buying force has continued to try to recover on the charts.
Bitcoin has shown a bullish divergence on the 1-week chart. Image Source: BTC/USD on TradingView Bitcoin has fallen over the weekend and BTC has remained flat for the past 24 hours. Over the past week, the coin is down about 3%. The 1 week chart showed an increase in upward pressure. Long-term bulls could break the $38,900 price mark. For now, in the short-term, if the bulls re-emerge, a stable support zone may form between $38,000 and $37,000 and this should prevent the coin from moving further lower.
The indicators on the 1-week chart are giving mixed signals as the indicators continue to trend downward. The RSI and MACD both showed a hidden bullish divergence (white). Bullish divergences are considered positive and this could lead to price action to the north.
A bullish signal on the 4 hour chart
Bitcoin was trading in a falling wedge pattern. Image source: BTC/USD on TradingView
Bitcoin has been seen in a falling wedge since mid-April. A falling wedge is an upward price movement and is associated with a price breakout. On both the 4 hour and 1 week chart, there are divergences and bullish signals.
This indicates the possibility of a price breakout. In the case of the 1 week time frame, both indicators are showing bullish divergence which increases the chances of a breakout. On a short-term time frame, BTC continues to maintain a bearish view due to lower buying pressure.
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