Divergence Spells Trouble For Bitcoin
September 26, 2025
The stock market has struggled this week as heading into Friday’s session and the widely anticipated PCE inflation report, the Spyder Trust (SPY) and Invesco QQQ Trust (QQQ) are both 0.90% lower for the week. Both have been lower for the past three days, which has made some traders nervous.
Thursday’s survey from the American Association of Individual Investors (AAII) revealed no change in the bullish % to 41.7% while the bearish % declined to 39.2% from 42.2% last week.
The daily chart of the Spyder Trust (SPY) shows the three lower closes as the rising 20-day EMA at $654.49 has been tested. The daily starc- band support is in the $650 area. The pivot for September is at $636.18, with the preliminary October pivot in the $652 area. There is major support at $607, line a, and the February 2025 high. The September R2 resistance at $666.28 was exceeded on Monday as the high was $667.34.
The S&P 500 advance/decline line closed below its EMA on Thursday, so it is in the corrective mode. Initial support at line c has been reached, with stronger support at line d. A strong rally of 1-2% could move the A/D line back above its EMA as the weekly and monthly A/D lines are positive.
The bull%-bear% from the AAII data reached historic levels of low bullish sentiment, below -30, as the SPY was bottoming in March- May. This indicator was discussed early in the year as “it reached -51.4% on March 5, 2009, which was the lowest reading since the recession of 1990 when it reached -54%”. It has risen to 2.5% from below -20 as I have been expecting it to move to the +20 area before a stronger correction.
The Bitcoin to US Dollar (BTCUSD) has formed higher highs in 2025 as the yearly R1 resistance at 124,723 was tested in August before it declined to the 20-week EMA, which is now at 109,559. The weekly starc- band is at 97,565 with the yearly pivot at 81,742 along with the uptrend, line d.
As BTCUSD was making its high in August, the MACDs and the MACD-His both formed lower highs, lines b and c. They both turned negative at the end of August, which confirmed the divergence. This type of bearish divergence in the MACDs is quite a reliable signal that favors a deeper decline for the BTCUSD.
The stock market is higher early Friday in reaction to the PCE inflation report, but BTCUSD is still down 5% so far this week. Given the weekly bearish divergences, a rebound is likely to fail in the 111,000-113,000 area.
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