Bitcoin Technical Analysis 27 August 2021
Here is today’s technical update on the bitcoin price and the general crypto market:
Not much has changed since yesterday’s update. As it stands, bitcoin is still in an uptrend on the daily chart, with higher highs and higher lows.
Bitcoin is still trading just above both the 21 exponential (yellow line) and 200 simple moving average (orange line) on the daily chart. These two moving averages are currently just above $46,000.
For the bulls, it is crucial that bitcoin does not close a daily candle below these two moving averages. The 21-day EMA has held as support during this entire uptrend. So a daily close below here would signal a major shift in momentum to the downside.
The Bollinger Bands are also getting closer together, meaning that volatility is decreasing. This suggests that a large move is coming relatively soon. Will this move be to the upside or to the downside? Only time will tell!
If bitcoin can make a higher low over the weekend on the daily chart, we would confirm hidden bullish divergence on the RSI. In this case, the bitcoin price would be making a higher low while the RSI makes a lower low. In other words, the relative strength of sell pressure would have increased, but the price would still have moved up. This would show exhaustion from the bears, giving the bulls the upper hand.
However, if bitcoin closes a daily candle below the 21-day EMA, volatility is likely to increase to the downside. Bitcoin would then likely try and retest the 50-day simple moving average (blue line). This level is currently just above $40,000 but it is rising steadily each day.
Bitcoin 4-hour chart:
The 4-hour chart remains in a clear downtrend since yesterday. Although bitcoin is currently bouncing nicely off of yesterday’s lows. With that said, the trend is down, so we need to be weary of each bounce.
As shown on the chart, bitcoin is currently in a downward sloping channel.
In order for this to reverse to the upside, I would like to see a 4-hour close above the top of the channel as the first sign of strength. This is currently at around $48,000 (also in line with the 0.618 Golden Fibonacci retracement of the last drop). However, the longer the bounce takes the lower this line would become.
Next, bitcoin we would need to close a 4-hour candle above the previous high at about $49,000.
If that happens, the party should continue overall as this would lead to a higher high on the daily chart.
The altcoin market looks rather varied, with some charts looking good (such as Solana and Ada) while others look to be breaking down. Coming into the end of the month, the total altcoin market cap monthly chart has the potential to close this month on a higher high.
If the month ends with altcoin prices around these levels, the chart would also close above the upper Bollinger band. This would be very bullish for the overall crypto market and suggest that the “Bull run 2.0” scenario plays out.
Here, monthly volatility would be expanding while prices are going up. Not a bad combination if you are holding altcoins longer term!
Of course, bitcoin needs to hold the fort until the end of the month for this to be possible.
Disclaimer: This is not investment advice, it is just my opinion on the bitcoin chart right now. I can and will be wrong because markets are not predictable. My opinion can and will change depending on what the chart does next.