Bitcoin Top-Down Analysis – 22 December 2021

Weekly

Using a triple moving average (SMA) system helps to determine trends on charts. If the quick SMA is above the intermediate SMA, and the intermediate SMA is above the slow SMA, it is considered bullish. The more angle and separation between the SMAs, the more bullish the trend. Likewise, if the quick SMA is below the intermediate SMA, and the intermediate SMA is below the slow SMA, the MAs are lining up bearishly.

Therefore, according to the triple moving average system, bitcoin's weekly chart is neutral. Whilst the green quick SMA has reacted by moving downwards and crossing below the orange intermediate SMA, the intermediate orange SMA is still above the red SMA. I.e., the SMAs have not lined up bullishly nor bearishly. Moving averages are trend-following indicators, and that they haven't fanned out one way or the other, suggests bitcoin is consolidating. As such, future crossovers are still required to determine its directional bias according to this system.


Past Performance: Past Performance is not an indicator of future results.

Daily

Bitcoin's daily chart is in bearish formation. The quick green SMA is below the intermediate orange SMA, and the intermediate orange SMA is below the slow red SMA. The quick green SMA is converging on the intermediate orange SMA (aqua ellipse). This suggests the downwards momentum has slowed. However, a bullish crossover is required to negate the bearish formation. If this happens, applying a directional filter to measure sentiment will require that the green and orange SMAs turn up to confirm any emerging bullishness.


Past Performance: Past Performance is not an indicator of future results.

Hourly

For the daily chart to show any emerging bullishness, Bitcoin's hourly SMAs need to maintain their bullish formation. However, below it is evident that the cryptocurrency is in danger of losing this. The quick green SMA is very close to crossing below the orange intermediate SMA (aqua ellipse). If this charts, and the quick green and orange intermediate SMAs then cross below the slow red SMA, the likelihood of the downwards momentum resuming on the daily become a distinct probability. This in turn will then add pressure to the weekly SMAs.


Past Performance: Past Performance is not an indicator of future results.

Featured Image by Eivind Pedersen from Pixabay

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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