Bitcoin has been coiling in February after a dip from about 315 to a low near 210. The 4H chart shows that after this dip, volatility started to subside, and price started to trade sideways.
Bitcoin (BTCUSD) 4H Chart 3/2
(click to enlarge)
We can also see from the chart above the the moving averages started to cluster together into a sideways action. This also showed sideways action. Last week however, we started to see bitcoin hang on, as price started to hold above the 200-, 100-, and 100-hour SMAs. The ability to hold above these moving averages shows that price is bullish relative to where its been in the past 50, 100, and 200 hours.
Furthermore, the RSI has tagged above 70 and for the most part, has held above 40. When it does this, it reflects development of bullish momentum.
Perhaps the most visual clue for a bullish outlook this week is price action itself making higher highs and higher lows as well as breaking above a falling triangle resistance line. To start the week, we are seeing price pullback and respect the past range of price action, the broken triangle, and the moving averages as support. The engulfing bullish candles add to the clues that bitcoin has the 300-315 highs in sight in the coming week.
Let’s take a look at the daily chart.
Bitcoin (BTCUSD) Daily Chart 3/2
(click to enlarge)
The daily chart shows that the bullish short-term outlook is really a sideways medium-term outlook relative to the long-term bearish outlook that started in early 2014. The market was due for a correction, but it has already resolved its oversold conditions in the daily chart. still there is some short-term momentum, and as mentioned above, the 300-315 area is exposed. Note that this area will be reinforced by a previous support area in Oct-Nov 2014, as well as a falling trendline that is coming down from July 2014’s high around 665.
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