Bitcoin price action is at a standstill. Bulls and bears are divided over what happens next, leading to months of consolidation. This could all continue in the next few days, according to the top BTCUSD price chart you’ll see this week.
The chart shows just how serious the stalemate is in cryptocurrency markets right now, and why this week could be the end of indecision.
Bitcoin Momentum Pauses, But So What?
In technical analysis, the speed at which prices are rising or falling can be measured by momentum. There are various tools to get the job done, including the Moving Average Convergence Divergence indicator. The tool is designed to give overbought and oversold signals, as well as buy and sell signals based on signal crosses and MACD lines. Crossing through the zero line is also an indication of consolidating momentum, as well as the underlying trend.
For all these reasons and more, the chart below is very important. The chart is made of BTCUSD on a 1-week time frame. Below the price action is the LMACD – a logarithmic version of the MACD. The log version allows for further comparative analysis between long-term courses. With just a glance, it is easy to see that the instrument appears to be ready to cross down, to generate a sell signal.
The inflection point is visible in the LMACD | BTCUSD on TradingView.com
Below the Zero Line: Doom or Redemption?
Even worse is the fact that a sell signal will occur along with a failure to consolidate above the zero line on the LMACD. Such a sign of failing momentum is likely to lead to a retest of current bear market lows across cryptocurrencies. However, the D in the indicator name stands for “difference”. The signals are generated based on the instrument’s convergence or divergence. Divergence in Bitcoin may send the cryptocurrency market higher instead.
But beware. It is possible that both cases may occur before the end of the week. The LMACD could cross-down and turn the histogram red for the first time in 2023 and rattle those eager to jump the gun at the sell signal. After the shock, the instrument can diverge before closing and continue to push momentum and price to new highs. Alternatively, the instrument can deflect upwards at this point of inflection, only to later deflect downward. What is certain is that the current lack of decision-making in price direction is about to end, according to the LMACD.