2019-1-22 04:21 |
Bitcoin has formed lower highs and slightly lower lows to create a falling wedge formation on its 4-hour time frame. Support is holding for now but it looks like bears are trying to go for a break lower.
The 100 SMA is below the longer-term 200 SMA to confirm that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. Also, the gap between the moving averages is widening to reflect stronger selling pressure. Price is below both moving averages to signal the presence of selling pressure also.
RSI already dipped to the oversold region to signal exhaustion among sellers and appears to be pulling back up to indicate that buyers might return. In that case, bitcoin could still bounce off support and test the top of the wedge at the $3,800 area again. This lines up with the 200 SMA dynamic inflection point to add to its strength as a ceiling.
Stochastic has just reached the oversold region to reflect slower selling pressure and might also be due to turn higher soon. A shallow bullish divergence can be seen as price made lower lows while the oscillator had slightly higher lows since mid-January.
Still, a break below support could spur a slide that’s the same size as the wedge formation. This spans $3,600 to around $4,400 so the resulting downtrend could last by at least $800. Similarly a break above the wedge top could spur a rally of the same height.
Bitcoin has had a rough couple of weeks as traders appeared to turn their optimism down a notch. As it is, the industry has yet to report positive developments that could sustain the rallies from the start of the year, but the lack of bullish interest despite upside breakouts suggests caution.
The post Bitcoin (BTC) Price Analysis: Will This Wedge Support Hold? appeared first on Ethereum World News.
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