Bitcoin Technical Analysis 28 June 2021
The bitcoin price dipped lower over the weekend but found strong support on Saturday just above the $30,000 level. Prior to this, things really looked touch and go as bitcoin threatened a major downside move.
With that said, the move happened over the weekend. And bitcoin is well-known for weekend fakeout moves.
As of writing, the bulls are enjoying a bounce, with bitcoin sitting around the $34,500 mark.
Is it time for the bulls to rejoice? Or should we be more suspicious of the current price action?
Bitcoin 1 day chart:
As usual, let’s start with the bitcoin daily chart. We can see a few things that look good for the bulls on this time frame. We will now cover each of these separately.
1. Bitcoin will (at least) made a VERY slight higher high on the daily chart:
If you are a trader who bases your strategy on higher highs and higher lows, bitcoin just scraped through yesterday and closed slightly higher (~$34,700) than the price of the previous daily high (~$34,650).
If we continue higher from here before pulling back, we would have a more definitive higher high. But either way, we will make a higher high on the daily chart.
While this is good for the bulls, we have to bear in mind that the market is very “fakey” right now. We saw bitcoin make a higher high on 15 June above $40,000, only to then fall down below $29,000.
With this in mind, a subsequent lower high on the daily chart would look a lot more promising from a bullish perspective. This would signal further confidence in the market as traders who missed the weekend move enter long positions.
2. Bitcoin is currently finding resistance at the 21-day Exponential Moving Average (EMA):
Last week, we discussed how it is crucial for bitcoin to close a daily candle above the 21-EMA in order to become more bullish.
Apart from the brief fakeout/bull trap we saw in mid-June, bitcoin has traded below the 21-day EMA for the entire downtrend. The 21-EMA has also had a downward slope as we can see from the yellow line on the above chart.
In order to become more long term bullish, we would like to:
- See bitcoin close a daily candle above the 21-EMA.
- Retest the 21-day EMA and find support.
- See the 21-day EMA slope flatten and start to increase.
Last week the 21-day EMA was around $36,000. Now it is just above $35,000. This would also be an important phycological level for the bulls to secure.
3. The Bollinger Band price action looks positive on the daily chart:
I recently read a great book on Bollinger Bands. The book was written by John Bollinger himself, so I would highly recommend reading it if you would like to learn more about this indicator for your own trading!
I will write a longer post on this indicator in good time. But for now, I would like to highlight an interesting point about Bollinger bands that we can see right now in the daily chart of bitcoin.
In the book, Mr. Bollinger explains the concept of relative higher lows in price. A relative higher low can be lower than a previous low on the chart.
If the second low is closer inside the lower Bollinger band than the first low, it is a relative higher low.
If we zoom into the bitcoin 1-day chart, we can see this explained below:
Here is a link to the book if you would like to learn more:
Points 4,5 and 6 – RSI and MACD Analysis:
Going back to the first chart in this post, we can see that the daily RSI has two things that are bullish right now:
- The RSI has got back above its downward sloping trendline.
- The daily RSI chart is showing several drives of bullish divergence. This has now been confirmed as we have confirmed a lower low on the daily chart.
The above shows that the relative strength of buyers versus sellers is increasing – at least for now.
The MACD has also just crossed to the upside. This shows increasing bullish momentum.
The above analysis suggests that bitcoin could be setting up for a more prolonged upside move. But I would be more confident of this if bitcoin can:
- Close a daily candle above the 21-day EMA and then hold that as support.
- Make a new higher low on the daily chart after the “slight” higher high we may or may not put in soon.
But even then, there is a long way to go before bitcoin crawls out of this mess and tries to get back to all-time highs:
- We are still in a downtrend on the daily and weekly charts.
- Apart from the 2013/2014 “double peak” bull cycle, every time that bitcoin has corrected by over 50% the bull run has ended.
- We have not had a hash ribbons blue buy signal yet.
The above points still show major downside pressure for bitcoin – even if there is the potential for a relief rally in the short term. For now, we are still in a wide trading range until we break it.
As of writing, bitcoin is at the lower end of that range. And if we retest that again, it will be much harder to hold.
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 predicatble. My opinion can and will change depending on what the chart does next.