Price action for Bitcoin over the last few weeks seems to have created three higher highs visible on most time-frames. Despite the Bullish sentiment, most indicators have created three lower lows displaying potential bearish divergence around $9,800.
Bitcoin 8 Hour Chart
On the 8 hour chart for XBT/USD, we can see how price action has developed throughout the latest bull run over the last few months. Price levels are heading towards critical uptrend support at $8,800 as mentioned in my previous analysis. If price levels break this key support level the consensus for BTC short-term will no longer be bullish. It’s likely that if $8,800 breaks price levels could drop as low at $6,600 before recovering again.
Despite this bearish outlook it’s important to remember the overall trend is still very much bullish at the moment. No real bearish momentum has built up during this pull-back from the highs of $13,200, it’s been more of a steady decline leading me to believe critical support at $8,800 will hold strong and the current pull-back is just a much-needed breather for the BTC bulls.
Volume is clearly descending at this point visible on all time-frames which could propel price levels in either direction. If the lower volume continues as price levels approach $8,800 it’s likely that this level will not hold, adversely if a large volume spike occurs again similar to what we’ve seen throughout the tail end of June then it’s likely that will have a direct impact on price levels, and ending the short-term pull-back.
Price action has clearly created higher highs and lower lows on the RSI indicator showing bearish divergence could be playing out at this level.
Bitcoin Hourly Chart
On the 1 hour chart for XBT/USD, we can see the higher highs mentioned above that has developed over the last week stemming from $9,200 to $9,700. This leads me to believe $8,800 will be tested again over the coming days. I will be paying close attention to how price action reacts to testing this key support level to gauge where BTC will be heading.
In order for price levels to bounce off of key support, there must be very clear resistance from bulls as price levels drop which will be evident from volatile price action and large volume spikes. There seems to be a large number of orders resting between $9,700 and $8,800, so it’s likely there won’t be a large sell-off candle but more of a gradual decline through this price stage over the course of the coming week.
Do you think key support around $8,800 will hold for BTC over the coming days? Please leave your thoughts in the comments below!
Images via Shutterstock, Bitcoin chart by Tradingview