This is a technical analysis post by CoinDesk analyst and Chartered Market Technician Omkar Godbole.
Bitcoin traders, pull up the monthly candlestick chart, which is waving the white flag of indecision like never before, and October’s candle says it all.
The October candle represents a massive trading range, from about $103,600 all the way up to over $126,000. That’s a spread bigger than the preceding three months combined! Yet, BTC ended October with a modest 3.8% dip. When prices swings wildly but end the concerned period near where it started, it’s what some traders call an “indecision candle.”
A bull would see this as base building – a quiet moment before the next big leap up. That’s possible because BTC’s ongoing bull run from early 2023 has been a classic “stair-step” rally. Besides, historically BTC tops tend to form sharp, inverted V-shaped blow-off moves. So maybe it’s gathering bullish steam. But there’s a catch.
This indecision is happening at a key point: the trendline connecting bitcoin’s all-time highs from 2017 and 2021. Record highs is where buyers usually flex muscles, but right now, they’re hesitating. And the monthly MACD histogram, an indicator used to gauge trend strength and changes, confirms this slowdown in upward momentum, as it’s produces smaller peaks above zero instead of new highs.
Notably, last month’s new price high didn’t get MACD’s blessing, creating a bearish divergence that echoes the warnings seen at previous tops, like the famous 2021 high.
Throw in the fact that this uncertainty persists despite bullish news like Fed rate cuts and better U.S.-China trade relations, and the case for bulls starts to look shaky.
And if that’s not enough, bitcoin’s stuck-in-the-mud feel right now mirrors the indecision we’re seeing in the U.S. dollar index (DXY) after its own big downtrend. The DXY looks primed for a turnaround and could soon rally, which historically puts pressure on bitcoin’s rally.
Where does that leave us? If momentum is fading and buyers can’t push through resistance, BTC could see a pullback to around $100,000 or lower before attempting the next grand move. Conversely, a renewed move above $116,000 would be needed to reconsider the bullish outlook.