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Bitcoin is Testing this Week's Price Bottom

Bitcoin began the week bearish, falling from last week’s high of 534 to 470 this week. For most part of the week, price consolidated roughly between 470 and 490. Then we had a breakout above this range on Thursday (9/4).

Bitcoin 1H Chart 9/5
bitcoin 1h chart 9/5
(click to enlarge)

Here are some bullish observations:
1) Price broke above the 100-, and 50-hour simple moving averages (SMAs). If the bullish development is to continue, price should stay above these SMAs.
2) The rally was accompanied by relatively strong volume.
3) The RSI pushed above 70 showing the start of bullish momentum in the 1H chart.

However here are some observations that suggest the bearish outlook is still alive:
1) The rally failed to clear above the 200-hour SMA.
2) A falling trendline from last week’s high was cracked by it still remains resistance.
3) Price is now cracking a near-term rising trendline and looks poised to test the price bottom created this week.

When we look at the 4H chart, we can see that the current price action is within the context of a consolidation between 442 and 534, which follows a prevailing bearish trend.

Bitcoin 4H chart 9/5
bitcoin 4h chart 9/5
(click to enlarge)

There are some observations in the 4H that suggest the market is still bearish.
1) Price is still below the 200-, 100-, and 50-period SMAs.
2) The RSI is still holding below 60 after tagging 30 and 20. This shows maintenance of the bearish momentum.

So, we can see that bitcoin is at the crossroad. If price falls below 479, this week’s price bottom would be invalidated, and price would be pressured toward the 470 low on the week. Below that, the August-low at 442 will be in sight. This is the outlook that is in-line with the prevailing trend, so we should highly anticipate such a scenario.

Now if price can push above 500 and the falling trendline from 534, then bitcoin might be developing a bullish outlook, but it would be first limited to the 523 and 534 high. After a break above 535, we can then start considering a bullish outlook in the medium-term.

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