The price of bitcoin has risen by over $ 300 from today's low and now has its sight on a key technical hurdle that, if passed, could trigger a stronger rally, suggests the analysis.
At 15:00 UTC, the price of the bitcoin began its ascent, invalidating what was a tight trading range between $ 3,580 and $ 3,630. The move occurred just above the previous resistance from December 18 near $ 3,550 – a level that now appears to have been correctly reversed to support the last push.
Now it seems that the bitcoin bulls want to revive and extend their rally from just eight days ago, when prices have been pushed over $ 4000, but in the end they failed thanks to a clearance party from a peak of $ 4,236 on December 24th.
At the time of printing, the main cryptocurrency is trading at an average price of $ 3,842 according to CoinDesk pricing data.
The daily chart shows that the price reacts positively to many technical obstacles.
As you can see, the price has risen to a support confluence including the Bollinger band baseline of the day, the Fibonacci retracement of 61.8%, as well as the previous support and resistance area near at $ 3,500 (green zone).
In order for the bulls to now extend the rally to $ 5,000, the price of the bitcoin must scale the neckline of the inverse model of the widely observed head and shoulders – a bullish inversion indicator.
The model can be described as three successive troughs, whose center or "head" is the deepest.
If the bitcoin can find acceptance above the neckline, the inversion pattern should take effect, potentially sending the price to $ 5,200 which is measured by adding the depth of the head and shoulders back to the expected break point.
The hourly chart further illustrates the most recent bullish development. We can see that a bear flag (a bearish continuation model) had formed within a falling wedge, a bullish inversion model.
It is safe to say that the last push of bitcoin has invalidated the bear's flag and the price now has different resistances in its immediate path in the form of moving averages (MA).
As you can see, the price has been able to close the last hour above the 100-hour MA – an encouraging sign for short-term bulls, but the 200-hour strongest MA has yet to be conquered .
The relative strength index on the hourly chart is now considerably overbought, so consolidation or a shorter short-term withdrawal could be the most likely course of action.
- The daily chart shows an inverse head and shoulder model that could yield a $ 5,000 rally and perhaps more if its neckline is successfully resized.
- The bear's hourly flag has been invalidated in order to further ease bearish concerns for the time being.
- Acceptance below the last lower minimum of $ 3,567 will invalidate the bullish reversal and will probably bring the latest $ 3,130 lows in play – prices as per Coinbase.
Revelation: The author holds BTC, AST, REQ, OMG, FUEL, 1 ° is AMP at the time of writing.
Bitcoin image via Shutterstock; graphics of Trading View