Bitcoin fell from 523 last week to a low of 470 this week. After consolidating between 470 and 490 for a few sessions, price rallied sharply and broke above the consolidation range threatening the prevailing bearish outlook. Price has broken above the 100-, and 50-hour simple moving averages (SMAs), and the RSI pushed above 70. Also there is relatively strong volume on this rally.
More Resistance Above:
Still, there are some resistance factors in this 495-500 level, which bitcoin is testing right now, as seen in the 1H chart above. Here we see a falling trendline and the 200-hour SMA. If price retreats from this level, let’s monitor the 480 level. If the market is turning bullish in this time-frame, we should see price hold above 480. A break below 477 would push back below the SMAs and return the focus on the 470 level and lower.
When we look at the 4H chart, we see that if price breaks below 470, the bearish outlook would return, with at least the 442 August low in sight. We also see in the 4H chart that price is testing the 100-, and 50-period SMAs as it tests the 495-500 area. A break above 500 would put pressure on a falling trendline originating from the 534 high on August 21. Above this trend, bitcoin will be pressured toward the 525-535 area. A break above 535 would establish a price bottom and liberate bitcoin from the medium-term bearish outlook. However, a bullish outlook should probably be shelved until a break above 600. It should be noted that the area around 555 was a previous triangle support, so we might have to expect some resistance here as well.
In this possible bullish scenario, a test of 500 and respect of it as support should help build the case for the upside.
(click to enlarge)
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