If we are to believe the analysts at Fairlead Strategies, then there is currently a dangerous signal for Bitcoin. If that signal is confirmed, then it could well lead to a very difficult period for the digital currency, according to Fairlead Strategies.
But what signal is it? And can it really be all-determining?
Bitcoin is overheated?
While most of the market is fearful and bearish on the Bitcoin price right now, we must not forget that we are already up 300% since the November 2022 bottom of $15,470.
According to analysts at Fairlead Strategies, this upward trend is now in danger because of the so-called Stochastics. The stochastics is a momentum oscillator from technical analysis, which is used to compare the current price of a financial asset with a range of prices over a certain period; for example 14 days, weeks or even months.
The indicator fluctuates between 0 and 100, with any score above 80 essentially indicating that a market is overheating. Danger occurs when the oscillator subsequently dips below 80 points. According to analysts at Fairlead Strategies, this is a clear signal that the upward trend is weakening.
Now, Bitcoin’s 14-month stochastic has dipped below 80 points. This signal will be confirmed if the situation remains the same at the end of August.
More bad signs for Bitcoin?
The dire situation when it comes to Bitcoin’s 14-moon stochastic is supported by a more shallow MACD histogram (bottom of chart) and a flat Ichomoku Cloud (blue area in the chart).
According to the Fairlead Strategies analyst, all of this is creating a “challenging environment” for Bitcoin and the rest of the market. On the other hand, things are starting to turn in Bitcoin’s favor on a macro level.
Inflation finally seems to be on its way to the desired 2.0% while the US economy still looks solid and interest rates could soon fall. That should in theory be positive for the Bitcoin price.
In that respect, it can go both ways at the moment. Technical analysis is not an exact science, but macroeconomic conditions are also not the be-all and end-all when it comes to the Bitcoin price.
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Source: https://newsbit.nl/bullmarkt-bitcoin-in-gevaar-door-dit-signaal/
