Bitcoin prices are revisiting the H2 lows seen in November and has wiped away nearly 65% the gains experienced in 2019. Prices surged from approximately 3,600 in January to nearly 14,000 in July, only to tumble from the mid-summer highs to current levels testing the 7K mark. Prices were initially lifted as speculation that an ETF in the US would be introduced, but the process has been very slow, and retail investors have yet to find a way to invest in bitcoin without having to open a digital wallet. The monthly technicals are now pointing to lower prices, while the daily technicals are neutral and oversold.
The outlook for bitcoin is mixed. The monthly technicals are pointing to lower prices. The monthly MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-month moving average minus the 26-month moving average) has crossed below the MACD signal line (the 9-month moving average of the MACD line). The MACD histogram, is printing in the black with a downward sloping trajectory which points to lower prices. Momentum has reflected by the fast stochastic is also negative. The fast stochastics generated a crossover sell signal in August and continues to accelerate lower. This is also pointing to lower prices.
Daily Technicals are Neutral on Bitcoin
The volume on bitcoin trading has eased ahead of the new year, and it will likely take a breakout to entice investors back into the bitcoin market. Daily bitcoin prices are oversold. The fast stochastic, which is a momentum oscillator, has declined to 10.2, which is well below the oversold trigger level of 20, and could foreshadow a correction. The fast stochastics measures the price action over a designated period and generates an oscillator between 1 and 100. Levels below 20 are considered oversold while levels above 80 are considered overbought.
Medium term daily momentum on bitcoin is neutral as the MACD (moving average convergence divergence) histogram is printing near the zero-index level with a flat trajectory which points to consolidation. The MACD is moving closer to generating a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).
Volatility is Near Annual Lows
There is also very little volatility in bitcoin prices. The Bollinger band width, which is an indicator created from Bollinger bands, is printing near its lowest levels of the year. The Bollinger band width subtracts the Bollinger band high from the Bollinger band low. As the level contracts, the standard deviations of the price changes declines, which reflects lower volatility. As the Bollinger bands width expands, historical volatility is climbing. With bitcoin prices consolidating, volatility has moved to near the lowest levels of the year.