Bitcoin price action is at an impasse. Bulls and bears are at odds over what happens next, leading to months of consolidation. According to the main BTCUSD price chart that you will see this week, everything could have an impact on the next few days.
The chart shows how critical the stalemate in the crypto markets is right now and why this week could mark the end of the indecisiveness.
Bitcoin Momentum Takes a Pause, But What’s Next?
In technical analysis, the speed of price increases or decreases can be measured using momentum. There are various tools that will do this job, including the Moving Average Convergence Divergence indicator. The tool is designed to provide overbought, oversold, buy and sell signals based on crossings of the signal and MACD lines. Crossing the zero line is also an indication of strengthening momentum and the underlying trend.
For all these reasons and more, the following table is so important. The chart consists of BTCUSD on the 1-week timeframe. Below the price action is the LMACD – a logarithmic version of the MACD. The protocol version allows for a more comparative analysis between long-term cycles. At first glance, it’s easy to see that the tool appears poised to cross down and generate a sell signal.
The turning point is in the LMACD | visible BTCUSD on TradingView.com
Below the zero line: sinking or salvation?
What is even worse is the fact that the sell signal occurs simultaneously when failing to keep the LMACD above the zero line. Such a sign of failure of momentum would most likely lead to a retest of the current bear market lows across the crypto space. However, the D in the indicator name stands for “divergence”. Signals are generated based on the convergence or divergence of the tool. An upward divergence in bitcoin could send the crypto market higher instead.
But beware. It is possible that both situations will occur before the end of the week. The LMACD could turn lower and turn the histogram into the red for the first time in 2023, discouraging those looking to jump at the sell signal. After the market clears, the tool could diverge to the upside before the close, continuing to drive momentum and price to new highs. Alternatively, the tool could diverge up at this turning point, only to cross back down later. What is certain is that according to LMACD, the current lack of a decision on price direction will soon come to an end.
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