Bitcoin breaks 5-day long up-trend, dropping back to key support levels at $9,800. Since then bullish divergence appears to have formed on lower time-frames and could spur a reversal in the coming days.
Bitcoin 1-Hour Analysis
On the 1 hour chart for the XBT/USD pair, we can see the ascending wedge that formed throughout the middle of August. This wedge was broken two days ago on the 21st of August and has since dropped to key support at $9,800, as mentioned in my previous analysis on Bitcoin. Since re-testing key support, price action has begun to bounce, and form a short-term reversal.
MACD can be seen visibly rising at the same point in which Bitcoin created two lower lows around $9,800. This could indicate bullish divergence forming around this price point. POC (Point of Control) clearly acting as support around $10,100 as price action test this level multiple times within the last 24 hours.
The market price is seeing a small pump as candlesticks touch the 200 EMA. It’s likely another ascending channel will form over the coming days taking Bitcoin back up to re-test $11,100 which was previously rejected. 500 MA sitting at $10,900 will also be a big resistance point that Bitcoin will need to cross in order to sustain a breakout.
4-Hour Analysis
On the 4 hour chart for the XBT/USD pair, we can see the breakout zone highlighted. If price action can muster up enough volume, and bulls clearly re-gain control of the market once the breakout zone has been entered around $11,300, we should expect further upside. It’s likely once price levels breakout through the overhead resistance just below the breakout zone, Bitcoin will surpass both of these highs and proceed to create a higher high.
It appears as if Bitcoin has created a very large consolidation range from around $9,100 to $14,000 over the last few months. Once a break to the upside takes place, this consolidation phase will essentially act as fuel for another volatile move to the upside, similar to what we saw in June.
If the 0.382 Fibonacci level at $9,600 is broken to the downside, it’s highly likely that a strong down-trend will form and will most likely play out for the remainder of 2019. Whichever direction BTC decides to go, for example breaking upwards into the aforementioned breakout zone, or breaking down through the 0.382 the prior phase of consolidation, will act as rocket fuel for that given market direction, whether that be bullish or bearish. Risk management is essential over the coming days and weeks as BTC looks to come out of this consolidation phase.
Do you think BTC will break upwards or start a new long down-trend? Please leave your thoughts in the comments below!
This article is strictly for educational purposes and should not be construed as financial advice.
Images via Shutterstock, XBT/USD charts by Tradingview