Editor's Note: Welcome to Kitco’s new Bitcoin Daily Technical Alert. Every trading day veteran Kitco technical analyst Jim Wyckoff will provide you with a concise and easy-to-understand near-term technical brief on Bitcoin. Importantly, Jim will glean the short-term charts and technical studies, and then alert you to the signals he sees regarding upcoming potential bigger price moves or price trend reversals. Jim’s unique and exclusive daily technical report is an absolute must for any trader/investor/market watcher who closely follows Bitcoin.
(Kitco News) - The daily bar chart for Bitcoin-U.S. Dollar shows prices have been trending higher since September, but just recently the market has spiked higher, including pushing above $10,000 Wednesday. While markets price history shows that extreme acceleration (parabolic action) is likely the final stage of a bull market run, nobody ever knows how long a final, or blow-off, stage will last or how far prices will accelerate north. It’s my job in this Bitcoin Alert to provide you with the very early chart clues I discover, that would suggest a change in price acceleration or even a change in price trend for Bitcoin.
See at the bottom of the daily chart for Bitcoin-U.S. Dollar that the Directional Movement Index (DMI) has an ADX line (blue line) reading above 46.000. Any ADX line reading above 30.00 suggests a powerful trend is occurring in a market. I will be looking for “divergence” in the DMI in the coming days—whereby Bitcoin prices push still higher but the ADX line turns down. This divergence would be a bearish indicator of a market top being close at hand. But make no mistake: Bitcoin is a bullish, runaway freight train right now. Those attempting to forecast or pick a specific top are on a fool’s errand.