The bitcoin rebounds at the bottom of its descending channel on the 1 hour time frame and a small inversion pattern is also forming. An inverted head and shoulders can be seen and a break above the neckline could confirm that a rally is being worked on.
However, the 100 SMA is still below the 200 long-term SMA to indicate that the path of least resistance is downward. In other words, the downward trend is more likely to gain traction rather than reverse. Then again, the gap between moving averages is shrinking to signal a weaker selling pressure and a potential crossover towards the top.
If so, bitcoin could gain more bullish energy to break over the neckline around $ 3,750 and climb at least the same height as the chart model. This could be enough to bring it into the central channel area of interest at $ 3,800 or the top channel around $ 4,000 to $ 4,100. The price should also close above the 200 SMA dynamic inflection point as an indication of bullish pressure.
The RSI is getting lower after a brief test of the overbought area, indicating that buyers are tired and allow sellers to take over. Stochastic is also in the overbought region to reflect the exhaustion among buyers and is also starting to turn south, so the bitcoin could follow the example. In this case, the price could return to the channel fund around $ 3,550-3,600.
Bitcoin has struggled to stay afloat and take advantage of the optimism that was at stake to start the year with the arrival of a series of uncertainties. However, the bulls still seem interested in buying declines and defending short-term support levels. Keep in mind that the bitcoin is also located inside a larger channel that is visible on the 4-hour or daily time, so there may be additional areas of floor support nearby.