Today, bitcoin closed its monthly candle, and Jesse covered what it means in his livestream today

You can watch it below:

Bearish ideas

The monthly candle close for bitcoin was mostly bearish, so let’s cover those first.

1. Monthly chart closed with a reversal candle.

The Sharp Shooter Indicator closed the month with a reversal candle.

This is quite rare and should give us caution that this correction might take longer play out if the trend continues next month.

However, it’s worth noting that reversal candles don’t always follow through.

For instance, we printed this daily candle close, and then printed another eight bullish candles after, invalidating the reversal.

Jesse tweeted out a similar question about the monthly RSI chart.

Is this top in, like in 2021? Or will RSI go on to make higher highs, like in 2017?

2. Monthly candle was “bearish engulfing”

“Bearish engulfing” means that the April candle was red and closed below the March candle. This tends to be considered bearish.

In recent history, though, we’ve had 6 bearish engulfing monthly candles and half the time, they’ve turned green the next month.

3. It closed below 2021’s highest monthly close

Similarly, the highest monthly candle close in Oct 2021 was $61.4K, and April closed below this level at $60.6K.

However, it also closed above the Mar 2021 close of $58.8K.

4. New daily close lower.

On the daily chart, we got a new lower candle close below this range that we mentioned in yesterday’s newsletter we were watching.

Bullish ideas

This monthly close is mostly bearish, but there are a few silver linings here.

1. For now, the $60K level held

$60K is a round number, and so some would say that closing below this psychological level is bearish. Bitcoin slightly avoided this fate.

2. A red month after 5 green months is natural

It’s important not to get too bearish. Bitcoin just had five straight months of green candles, so a red candle and consolidation here is natural.

Even a 50% retrace of the move over the next few weeks would bring us back to $50K, which would offer a strong support for a move back up.

This would also be ~30% correction from the top, which is common for bitcoin in a bull market.

3. Price closed above the 100DMA

Bitcoin has yet to close below the 100 day moving average (DMA).

The last time it touched the 100 DMA was back in January before it started its next move up. RSI was at the same level it is now.

If we start getting candle closes below the 100DMA, then we’ll look to the 200DMA as the next level of support, which is around $49K right now but moving up.

3. The daily wick is filled on Coinbase

Price briefly broke this major wick and closed above it, which means the wick down is now closed.

Large wicks are indicate imbalances in trading volume, and so price often likes to fill these imbalances before reversing a trend.

4. Correction in time is getting closer

Corrections often don’t just play out in price—they also have to play out in time.

Price resets and so does sentiment, and that just takes time.

Right now, RSI has been correcting for about 62 days. In the last part of the run, RSI corrected 89 days.

However, it should be noted that the biggest movement down in price can happen when RSI is lowest.

5. Bull markets haven’t ended with BTC.D this high

Bull markets have never ended with bitcoin dominance at the highs. This would be an unusual bull market if this were the end.

What this means

When we put this altogether, this monthly close is still mostly bearish.

We’ll stay cautious and continue to watch RSI and price to make sure we buy the right dip.

We hope you’ll watch with us!

Want more of this? Less? Too detailed? Not detailed enough? Let us know!

Some love from our last newsletter, My Tweet on Bitcoin:

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Disclaimer

The contents of this newsletter are expressed in my opinion only, none of which is financial advice. Always do your own research as this information is intended for educational & entertainment purposes only.