Bitcoin is now set up for a bounce. But, it’s still too early for a sustainable rally phase.

When we looked at the King of Cryptocurrencies last week, we cautioned the technical setup looked bearish.

Even though Bitcoin had declined 18% from its high in October, it still had farther to fall. We suspected traders would get a chance to buy it closer to $94,000.

Bitcoin hit that price on Monday. And, it kept falling – trading as low as $90,000 per coin.

Technical conditions are oversold enough now to justify a bounce. But, we still don’t have the setup needed to call for a bottom.

Here’s an updated look at the chart I showed you last week…

Over the past week, Bitcoin broke below the first support level near $102,000. It also failed to hold above the secondary support level at $94,000. So now it appears the King of Cryptos is headed towards $84,000.

The momentum indicators at the bottom of the chart are deeply oversold. In fact, the MACD indicator is more oversold today than at any other time over the past year. This condition could lead to a bounce at any time.

The problem for crypto-bulls, however, is the lack of positive divergence.

As the price of Bitcoin has been falling, the momentum indicators have been falling as well. This condition confirms the downtrend is strong, and it’s likely to continue.

The CCI indicator does show some positive divergence – similar to what it showed in August. That supports the potential for a short-term bounce. But, in order to get a sustainable rally, we need to see positive divergence on all three of the momentum indicators – similar to what occurred in April.

In order for that to happen, Bitcoin needs to rally enough to pull the momentum indicators off the bottom… then on the next decline, as Bitcoin makes another lower low, the momentum indicators need to hold above the current lows.

That’s going to take some time.

So, if you’re looking to play Bitcoin for a bounce, you can buy it here. But, don’t overstay your welcome. Bitcoin still has farther to fall.

Best regards and good trading,

Jeff Clark

Trump is Fast-Tracking These Three Companies [sponsor]
The Trump administration is planning to invest DIRECTLY in a small sector of the stock market… And they just revealed the names of three potential targets. Click here to see the details because legendary investor Louis Navellier believes shares are about to skyrocket.

Source: Jeff Clark Trader