According to a recent Twitter post from Josh Olszewicz, an analyst at Brave New Coin, Bitcoin’s one-day chart is starting to show signs that bears are starting to creep into the cryptocurrency scene. He explains that Bitcoin is currently trading in a rising wedge pattern, which if not broken past, often acts as a catalyst for a bearish trend reversal.
What’s more, there have been bearish divergences between Bitcoin’s price, and the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD).
I like Josh and he's bringing some solid classical TA to the table here. He's not wrong about the classic warning signs. I myself have been wondering if a major correction is looming.
However, there are some counterpoints to make. For one thing, as counter intuitive as it may seem, Bitcoin often breaks up from rising (bearish) wedges. For another thing, there are some nuances to reading momentum divergences. When the high time frame (weekly) indicators are overbought, indicating a very strong trend, divergences on the daily time frame are often negated. In fact, if we break up from this price formation, the daily indicators will have lots of room to run higher now.
Overall he's right, it's a good time to be on the lookout for larger correction. If we start holding below the 20-day MA, it might just be time.
