Bitcoin bulls may be in for a disappointment, according to Fairlead Strategies, as a monthly technical indicator has flashed an overbought downturn signal. The stochastic indicator, developed by George C. Lane in the 1950s, recently turned down from above 80, indicating a loss of upward momentum. Katie Stockton, Fairlead Strategies’ founder and managing partner, noted that this downturn suggests the basing process may be drawn out, especially given the resistance at $31,900. Previous overbought downturns in early 2021 and December 2017 marked major price tops.
The monthly MACD histogram, an indicator used to gauge trend strength and trend changes, is flatlined near zero, indicating neutral long-term bias. Stockton noted that the indicator has yet to turn positive, suggesting a sustainable uptrend is not yet in force. Bitcoin is currently trading at $25,700, with immediate support at $25,200 and key resistance at the 50-day simple moving average of $28,200.
The downturn suggests the basing process may be drawn out, Stockton said.