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Bitcoin (BTC) scored its longest series of monthly losses in seven years in December.
The main cryptocurrency for market value closed at $ 3,689 on December 31st, a decline of 13% compared to the monthly opening price of $ 4,241. That was the fifth consecutive monthly loss – its worst period since November 2011 – according to CoinDesk's Bitcoin Price Index (BPI).
At that time, BTC was trading below $ 20 and had depreciated by 81 percent in five months until November 2011. In particular, the tide had turned into the bulls' favor in the following months. BTC gained 59 percent in December 2011 and reached record highs above $ 900 in November 2013.
Bitcoin can repeat the history by publishing earnings this month. After all, cryptocurrency seems oversold, having lost 52 percent in the last five months and 70 percent in 2018. In addition, it is currently down 80 percent from the record high of $ 20,000 seen in December 2017.
Follow-through, however, may lack vigor, as fundamental fundamental metrics are still biased towards bears. For example, the widely followed NVT (Network Value Transmission) ratio of 108 is still reporting overbought conditions.
Furthermore, in the technical rankings, a long-term bullish reversal would be confirmed above the 21-month exponential moving average (EMA) of $ 5.547.
At the time of writing, BTC traded at $ 3,790 on Bitstamp – up 1.86% on a 24-hour basis.
Daily chart
The bitcoin is likely to track a reverse trend inversion head and shoulders on the daily chart with the resistance of the neckline at 4.80.
A UTC close above that level would open the doors to $ 5,200 (target according to measured displacement method).
More importantly, resistance at $ 4,180 could be tested early as the 3-day chart is biased towards bulls.
3 day chart
As seen above, BTC holds well above the December low of $ 3,122. Therefore, the bullish point of view proposed by the positive divergence of the relative strength index (RSI) in mid-December is still valid.
4-hour chart
On the 4-hour chart, the moving average of 100 candles (MA) is on the MA with 200 candles, indicating that the path of least resistance is on the upper side.
The graph also shows a rupture of the falling channel – a bullish model. BTC, therefore, could reexamine recent highs above $ 4,200.
view
- BTC could trigger the series of losses at five months in January.
- A reverse breakout of head and shoulders, if confirmed, would confirm the bullish divergence of the RSI seen on the 3-day chart and could yield a rally to $ 5,000 in the short term.
- The after-sales prospects of BTC in January will drop if prices are found to be below the low of 27 December at $ 3,566.
Revelation: The author does not hold cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; graphics of Trading View
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