Bitcoin’s Uptrend Threatened by Looming ‘Stochastics’ Signal: Fairlead Strategies

Stochastics is a tool employed by technical analysts and traders to assess the market momentum of a security, comparing its current rate to price ranges from a specific timeframe, usually spanning 14 days, weeks, or months. Essentially, it oscillates between 0 and 100, with readings above 80 suggesting the asset is overbought.

In simpler terms, when an oscillator falls from areas exceeding 80 (which is considered overbought), it suggests that the upward trend may be losing strength, potentially leading to a decrease in prices.

As a crypto investor, I’ve noticed that Bitcoin’s 14-month stochastic has dipped below 80 recently. If this trend continues past the end of August, it may signal an overbought downturn in the market.

According to analysts at Fairlead Strategies, who recently shared their insights with CoinDesk, the current monthly chart of bitcoin indicates an approaching overbought downturn based on the stochastics data. If this trend is verified by the end of the month, it could serve as a bearish signal, implying that the recent trading range may signify the conclusion of the cyclical uptrend from the 2022 lows.

As a cryptocurrency investor, I’ve noticed that Bitcoin’s upward momentum seems to have hit a roadblock since March. Despite several attempts by bulls, they’ve been unable to secure a strong position above $70,000, as suggested by the resistance line on my monthly chart.

According to Fairlead Strategies, an upcoming potential downturn indicated by the stochastic indicator is also seen with less pronounced MACD histogram bars and a leveled Ichimoku cloud (the blue shaded area). This combination suggests a “difficult market situation ahead.”

The MACD graph is frequently employed to assess the intensity and shifts in trends. When lines cross above or below the zero line, it signals a change from a bullish to a bearish trend, or vice versa. The size of the bars indicates the force of the market movement. Similarly, the Ichimoku cloud serves as a momentum indicator.

Bitcoin changed hands at $60,660 at press time, according to CoinDesk data.