This post offers a technical analysis from CoinDesk analyst and Chartered Market Technician Omkar Godbole.
Bitcoin’s three-week price surge seems at risk of a downturn as the Nasdaq, known for its tech focus, encountered resistance last week, suggesting possible challenges ahead.
Following a dip to $80,000 on Nov. 21, BTC has progressively risen above $90,000, forming higher lows and highs within a counter-trend rising channel amid a broader downtrend.
The recovery seemed promising as the dollar index fell after Wednesday’s Fed rate cut, and a long-term trend indicator suggested a potential positive shift in BTC momentum.
However, these factors failed to lead to a continuous rally. Instead, BTC dropped from $93,000 on Friday to near $88,000 on Sunday, eventually stabilizing around $89,600 at the time of writing.
BTC concluded the previous week with a bearish candlestick characterized by a long upper wick, indicating rejection above $94,000, and a small red body with an insignificant lower wick. This typical rejection pattern indicates waning bullish momentum and a prevailing “sell-the-rallies” approach at peak levels.
This pattern, in conjunction with the Nasdaq’s halted recovery from November lows, raises alarms for a significant BTC dip towards $80,000.
The Nasdaq saw a nearly 2% decline last week, forming a bearish engulfing candlestick that reversed the gains from the previous week. Coupled with a bearish MACD on the weekly timeframe, this suggests potential downside volatility that could affect BTC, given their strong positive correlation, especially apparent during NDX’s downturns when BTC typically incurs deeper losses, as pointed out by Wintermute.
Another concerning sign for risk-asset investors is the MOVE index, which tracks the 30-day implied volatility in U.S. Treasury notes.
The MOVE index formed an inverted hammer candle last week. This candlestick pattern typically indicates an early sign of bullish revival after a prolonged downtrend like in MOVE’s case.
This indicates that the MOVE index may increase, signaling heightened volatility in Treasury notes, which generally leads to financial tightening globally and limits gains in risk assets. Historically, BTC has shown a tendency to move in the opposite direction of the MOVE index.
Critical Levels
Given the context, BTC seems more inclined to break down from the counter-trend channel rather than rallying higher, potentially leading to a re-test of recent lows at $80,000.
On the bullish side, surpassing the $94,000-$95,000 range is necessary to restore short-term bullish sentiment, although significant resistance resides between $96,000 and $100,000, including the 50-day SMA and Ichimoku cloud.
