The eight-day consolidation period of Bitcoin seems to have weakened the prospects for a decline to the December lows of close to $ 3,100.
The main cryptocurrency for market value has been limited to a narrow range between $ 3,500 and $ 3,700 from January 11.
The game in the series is somewhat surprising, as BTC has prepared the ground for a quick slide to the December lows close to $ 3,100 with a 9% drop from January 10 – the biggest one-day decline since November 24 . In particular, prices fell to $ 3,500 a day, canceling the gains of the previous two weeks.
Despite the abrupt bearish reversal, a convincing pause under the psychological support of $ 3,500 remained elusive for eight days.
This could be considered a sign of sellers who do not want to offer the cryptocurrency so low in the bear market. In other words, the probability of a fall to the December lows has diminished, courtesy of the activity related to the interval.
As a result, the break interval and a new $ 4000 test could be in sight. At the time of writing, the cryptocurrency is changing hands at $ 3,620 on Bitstamp.
As seen above, BTC recorded a sharp decline on January 10, confirming a reversal of bearish doji. The relative strength index (RSI) also returned to bearish territory below 50.00.
However, psychological support for $ 3,500 held up.
The breaking of the descending triangle on the hourly chart could be considered a bear failure test at $ 3,500 with consequent positive price action.
More importantly, the breaking of the triangle opened the doors to $ 3,724 – the neckline of the reverse head-and-shoulders model.
A move higher than $ 3,724 would confirm an upward downward trend change on the hourly chart and would allow a stronger rally to $ 4000 (target as measured by the measured movement method).
- The BTC series game probably represents a bear exhaustion.
- A reverse breakout of head and shoulders, if confirmed, would open the doors to the psychological obstacle of $ 4,000.
- Acceptance below $ 3,500 would strengthen the primary downtrend (a 10-week decline in MA) and increase the probability of a decline to $ 3,122, although this scenario now seems less likely.
Revelation: The author does not hold cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; Charts for Trading View