Bitcoin is bouncing off support at the bottom of its descending channel on the 1-hour time frame and a small reversal pattern is also forming. An inverse head and shoulders can be seen and a break above the neckline could confirm that a rally is in the works.

However, the 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the downtrend is more likely to gain traction than to reverse. Then again, the gap between the moving averages is narrowing to signal weakening selling pressure and a potential upward crossover.

If so, bitcoin could gain more bullish energy to break past the neckline around $3,750 and climb by at least the same height as the chart pattern. This could be enough to take it to the mid-channel area of interest at $3,800 or the channel top around $4,000 to $4,100. Price would also need to close above the 200 SMA dynamic inflection point as an indication of bullish pressure.

RSI is turning lower after a brief test of the overbought zone, indicating that buyers are tired and allowing sellers to take over. Stochastic is also in the overbought region to reflect exhaustion among buyers and is also starting to turn south, so bitcoin might follow suit. In that case, price could dip back to the channel bottom around $3,550-3,600.

Bitcoin has struggled to stay afloat and take advantage of the optimism that was in play to start the year as a host of uncertainties came through. However, bulls still seem keen on buying on dips and defending near-term support levels. Note that bitcoin is also within a larger channel visible on the 4-hour or daily time frame, so there may be additional floor support zones nearby.

The post Bitcoin (BTC) Price Analysis: Reversal Formation Gives Bulls Hope appeared first on Ethereum World News.

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