FX.co ★ How to use technical indicators of bitcoin to understand the further price movement

Over the past week, bitcoin managed to survive a powerful collapse, after which it rebounded to a local maximum. The coin showed good dynamics of price growth, but as it approached a difficult sales area, it began to lose momentum. It is due to both technical and fundamental factors. In any case, the current market sentiment and the estimated dynamics of the cryptocurrency price movement can be determined thanks to technical indicators on the horizontal charts of bitcoin.

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Technical indicators are instrumental metrics that allow performing technical analysis of financial instruments in different periods. It is an important tool in determining the current trend of the market and an individual asset and allowing you to determine the direction, strength, and important zones of cryptocurrencies (financial instruments).

On the horizontal charts of bitcoin, an ascending price line is visible, which was formed on September 13, after a 15% collapse. After reaching the local maximum, the quotes began to decline due to an increase in the pressure of sellers. As a result, the coin sank slightly in price and then continued to grow. Over the past day, the cryptocurrency has hardly changed in price and is quoted at $ 47,800. It is worth noting that when studying changes in the price of instruments, it is important to note how much it has changed. In the case of bitcoin, the price remains in place, indicating a narrow range of fluctuations in the asset. If BTC does not go beyond a certain price range, this indicates the accumulation phase, and therefore it is not worth counting on a powerful and reasonable growth in the near future.

Turning to the technical indicators of the asset, it is worth highlighting three main ones that allow you to determine the further price movement: MACD, RSI, and stochastic.

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The relative strength index (RSI) is a technical indicator that allows you to determine the trend's strength (descending or ascending) and warns about possible changes in the direction of price movement. Thanks to this metric, it is possible to determine at what stage the asset is overbought or underbought. The optimal mark for this chart is 60 if we are talking about a bullish trend. When crossing this mark, the coin begins to move towards overbought.

MACD (index of convergence/divergence of moving averages) is an indicator that allows you to draw certain conclusions about the trend based on the movement of moving averages. The usual bullish signal is the intersection of the white line under the red one and the bearish one. On the contrary, when the white line above crosses the red one, which indicates a downward movement.

The stochastic indicator indicates the strength of the momentum of the current prevailing trend. If the indicator is above the mark of 80, then the asset can be considered overbought. If the stochastic is below 20, then this is an oversold signal of the asset.

Bitcoin indicators can be compared in different time ranges. If you need to determine the local dynamics of price movement, then an hour or four-hour technical chart will be the most convenient. The four-hour chart clearly shows the current weakness of the market and the continuation of the sideways movement. The main indicators remain neutral and move sideways. It indicates the insufficient strength of the current upward trend and the need to accumulate volumes before making a bullish breakdown of the resistance zone.

Things are much more interesting on the daily chart because bullish signals have appeared, and there is a chance to move up. Technical charts indicate the growing strength of the current bullish momentum: stochastic starts moving towards 60, as does the RSI. At the same time, the MACD is moving along the red zone (a bearish signal), and in the near future, it may form a bullish intersection. All this indicates that the local consolidation period is ending, and the market is ready to push the bitcoin price above $ 48,000. At the same time, appropriate trading volumes and on-chain activity (or active actions of whales) are necessary to implement even the most powerful bullish signals.