Nearly every single cryptocurrency I look at has hidden bearish divergence on their respective daily charts. Hidden bearish divergence is a condition where price makes lower highs, but an oscillator such as the RSI or the Composite Index makes higher highs. Hidden bearish divergence warns of a continuation of bearish price action – but it is only relevant if the prior trend was bearish. For most cryptocurrencies, the short-term daily trend has been bearish.
Above: Cardano (ADAUSD) Chart
Cardano (ADA) continues to face a lot of pressure as it approaches the daily Kijun-Sen. Ever since June 18th, there has been intense selling pressure whenever Cardano moves to the Kijun-Sen. The blue arrows on the chart correspond to the same period as the blue arrows in the RSI below. Cardano has made lower highs while the RSI has made higher highs – hidden bearish divergence. This divergence also appears as the RSI is beginning to test the 50 and 55 levels. 55 is the first overbought level in the RSI when an instrument is in a downtrend. The RSI itself has printed a rising wedge – a very, very bearish continuation pattern. I anticipate Cardano trading lower to at least the 1.20 level. If 1.20 fails to hold, then a visit to 0.84 – 0.94 is next.
Above: Polygon (MATICUSD) Chart
Like Cardano, Polygon (MATIC) is displaying hidden bearish divergence. There is a massive amount of resistance for Polygon above at the 1.3755 level. 1.3755 contains the daily Kijun-Sen, three trendlines, and the 38.2% Fibonacci Retracement. Polygon finding weakness against that resistance is typical, and for anyone who is bearish, the setup is very tempting. There doesn’t appear to be much momentum present to continue the push higher for Polygon, so I would expect to see a move down and a test of the 61.8% Fibonacci Retracement and high volume node at $0.85. Below $0.85 is a massive volume dessert in the volume profile – almost no support exists to stop Polygon from hitting the mid $0.40s if $0.80 fails to hold.
Above: Litecoin (LTCUSD) Chart
Litecoin’s (LTC) current Ichimoku chart shows nearly the same bearish continuation setup as Cardano and Polygon. The blue arrows on the chart and the Composite Index show where the hidden bearish divergence exists. Now, I could see Litecoin moving above the daily Kijun-Sen to test the 2021 VPOC (Volume Point of Control) at 175 before facing pressure lower. Litecoin’s RSI has been facing consistent resistance at the 50 level, so it should be no surprise to see weakness moving into Wednesday, Thursday, and Friday.
Across all three cryptocurrencies above, the current Ichimoku charts are bearish. I will continue to remain a short-term bear as long as price is below the Cloud and the Chikou Span remains below the candlesticks. The only time I will convert to a full on bullish stance is when price is trading above the Cloud and the Chikou Span is trading above the candlesticks.