Backdrop: Bitcoin prices have been on a roller coaster in the past couple of years. In 2013, price was hanging around just above 100, until late October when it started to take off until a high of 1163 and the end of the year. Then in 2014, price started to retreat in a choppy manner, hitting a low on the year at 340 in April. Since then, price has been drifting sideways, but maintains the bearish bias.
From June to July, btcusd was forming a descending triangle, with support around 555. In August, price fell below this triangle, triggering a bearish outlook with the 20
14-low of 340 in sight. So far, bitcoin is holding above the August low of 442 consolidating with a high at 534. Last week, price started to look bearish again, when it broke below a local support pivot at 487. It looked poised to test the 442 low again.
If price breaks below 442, it opens up not only the 420 low from April-May, but also the 340 low on the year.
Bitcoin Daily Chart 9/2
(click to enlarge)
When we look at the 4H chart, we can see that the bearish trend is maintained based on the moving averages, price relative to the moving averages, and the RSI which held below 60 after tagging below 20. The RSI has tagged 30 again, showing bearish momentum. Price is so far holding above 472 this week. There appears to be a pullback, but the overall trend remains bearish. In this case, look out for sellers in the 500-505 area. In this area, bitcoin would be tested by a falling trendline, and the 100- and 50-period SMAs. A break above 505 would put this market back into consolidation mode, especially if the 4H RSI pushes above 60, to show loss of bearish momentum.
Otherwise, if price can hold south of 500, given some elbow space, and the 4H RSI can remain below 60, the bearish outlook remains, with downside risk toward the 442 August low, as well as the 420 then 340 support levels.
Bitcoin 4H Chart 9/2
(click to enlarge)
Now if price rallies above 505, the focus would be back to 523-534 resistance area. Above that, we should anticipate resistance in the 550-560 area, which was the previous triangle support. A break above 560 might give the bearish outlook some trouble, but a break above 600 might be needed to introduce a bullish outlook in the medium-term.