This is a daily analysis by CoinDesk analyst and chartered market technician, Omkar Godbole.
bitcoin It has remained above $100,000 for four consecutive months, a price stability that can be interpreted as forming a solid foundation for the next bullish move.
However, an important volume indicator, used to confirm price trends, shows a contrasting signal.
The indicator under consideration is Breakeven Volume (OBV), described as the “grandfather” of all volume indices by Charles D. Kirkpatrick II and Julie R. Dahlquist in their book Technical Analysis: The Complete Resource for Financial Market Technicians.
On balance volume (OBV) is a cumulative total of an asset’s trading volume that adds volume to the account on days when the price closes higher and subtracts when the price closes lower.
The OBV indicator is widely used to confirm price trends and can also serve as an early warning signal for an eventual resolution of a price range.
“When prices are in a trading range and the OBV breaks its own support or resistance, the breakout often indicates the direction in which the price breakout will occur. Therefore, it gives an early warning of the breakout direction of a price pattern,” Kirkpatrick II and Dahlquist said in their book.
That is precisely what the BTC OBV has done, warning of a deeper sell-off in the BTC price.
While bitcoin price remains range-bound above $100,000, the OBV indicator has broken below its own range, falling to levels last seen on April 24, when BTC was trading around $94,000.
This decline in OBV indicates underlying weakness, suggesting that demand may be faltering and prices could soon fall below $100,000. The bearish message is consistent with macroeconomic factors, which also favor a prolonged decline in prices.
Other momentum indicators, such as the MACD histogram, are showing bearish signals. The indicator is forming deeper bars below the zero line on the weekly chart, indicating strengthening bearish momentum.
Key levels
At the time of writing, bitcoin is trading well below its 50-day simple moving average (SMA), a key short-term trend metric, and is dangerously close to critical support near $107,300.
This support is marked by the intraday lows from the end of August from which the latest bullish movement began. A break below this level would shift attention towards the June 22 low, around $99.225.
On the upside, the 50-day SMA remains the level to beat for the bulls.
