After a steep decline in price action, Bitcoin finally finds some short-term relief from the bearish pressure that has seen price levels drop from $9,600 to $7,600 within a few days.
Bitcoin 4-Hour Price Analysis
On the 4 hour XBT/USD chart, we can see that price levels have rapidly declined resulting in Bitcoin dropping $2,000 within the space of a few days. Since then, short-term price action has formed a wedge that has clearly broken to the upside. This has resulted in price levels attempting to form a new uptrend. Buying volume has yet to flood back into the market and will be required in order to sustain any form of a new uptrend.
Currently, the market price for Bitcoin and the most recent 4-hour candle is touching the 50 MA at $8,440. Typically when new uptrends are beginning to form, traders will use the 50 MA as a pivot resistance point to gauge the strength of the trend. When price levels rise above the 50 MA this is a sign of sustainability and will likely result in a continuation of the newly formed trend.
Volume has clearly made three descending peaks since the 25th of September yet price RSI and price levels have been rising since creating a bottom at $7,700 mentioned in my previous analysis on Bitcoin. This could be a sign that a bullish divergence could play out over the coming days.
30-Minute Price Analysis
On the 30 minute chart, we begin to develop a clearer picture of how short-term price action has been unfolding prior to the breakout of the wedge mentioned in the 4-hour analysis above. Bitcoin price action breached through the wedge resistance around $8,050 and has since risen $400. Both the 50 MA and 200 EMA have crossed over one another in a bullish fashion since the breakout which is a very common indicator of a new short-term bullish trend forming.
POC (Point of Control) at $8,013 sits very close to the breakout point mentioned above and has clearly been breached in a bullish fashion. This is another strong indication of a bullish trend forming. Bullish volume has begun to taper off since the large spikes seen around the breakout point. Volume will need to be monitored as a continuation of low volume with selling spikes will disrupt any chances of a new bullish short-term trend forming over the coming days.
Do you think Bitcoin will continue to form a new short-term bullish trend and make $7,700 the new local range bottom? Please leave your thoughts in the comments below!
This article is strictly for educational purposes and is not to be construed as financial advice
Images via Shutterstock, XBT/USD charts by Tradingview
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