A move below is a bearish clue
The price of bitcoin has moved from a high of $17,027 to a low of $15,823. At the low the cryptocurrency tested the 200 bar MA (green line), and is finding some support buyers. We are retesting the 100 bar MA at $16,320.35 currently (blue line).
Yesterday, on the correction lower, the digital currency stalled just ahead of the 200 bar MA and ultimately moved to the new high above $17,000. So holding the 200 bar moving average keeps the buyers in control for now.
The 200 bar MA is up to $15,886.56 now and moving higher on every successive bar. That will ultimately make staying above harder and harder. The question on a break lower is how low can it go? Can it stay below the moving averages?
What might get longs more nervous is the space between the price and a longer MA - like the 100 hour MA (see chart below).
Looking at the hourly chart, below, the 100 hour MA is rising and up to $12,932, but we are now up at $16,450 area. A corrective move lower to test the 100 hour MA, would represent a near 21% decline (or a fall of nearly $3,500). A fall and bounce off the 100 hour MA would still keep the bulls in more control, but it would be painful for longs (especially those near the top).
Now....some will say the "market is overbought". So just sell it.
However for me, I try not to say that as markets can get even more overbought. Just ask those who sold at $12,000 because they thought the "market" was overbought at that level.
So instead, I like to tell traders to let the price action and tools take you out and define bullish and bearish..
With the price testing the 200 bar MA on the 5-minute chart both yesterday and again today, a move below the 200 bar MA on the 5-minute chart would a turning point for the shorter term bias. Until then, the buyers are still in control.
So be aware.