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article imageBitcoin drops today without testing key resistance levels

By Ken Hanly     Jan 3, 2019 in Technology
Although Bitcoin (BTC) has suffered a modest drop over the last 24 hours after moving up yesterday, technical analysis shows that within the next couple of days there is a chance BTC may test a key resistance level.
CoinDesk analysis
Omkar Godbole has his usual daily analysis of the price movements of Bitcoin at CoinDesk last updated at 11:12 UTC. Godbole notes that the 50 day moving average (MA) is presently located at $3,940 not that far from BTC's present price, so that BTC could test this key resistance level within the next several days. The last time that this MA was tested it was at $6,450 on November 8 and put up a stiff resistance.
On November 14 BTC had a sharp drop taking it below the $6,000 level. This took the 50-day MA well above the price. By November 25 it was $2,500 above the price. During the last two weeks that spread has narrowed considerably showing that bearish pressures are weakening. Price chart analysis indicates that signs favor the bulls. We can expect the resistance level of $3,940 should be tested in the near future.
Chart analysis
The daily chart shows that early on at 00:05 UTC Bitcoin was trading just $40 dollars short of the 50-day MA. Even though the price has since pulled back the future still appears bullish. The positive divergence of the relative strength index (RSI) validated on December 18 is still in play.
Furthermore, the five and 10-day exponential moving averages (EMA) are beginning to turn upward. The RSI above 50 is also bullish. However the 50-day MA is declining a bearish signal but long-term averages are lagging indicators. The price action always supersedes the lines of the long-term moving averages.
If there is a break above the 50-day MA it opens the way to reach $4,170 the neckline of the inverse head-and-shoulders pattern. The 50-day MA is also just below the neckline hurdle. The best level for the bulls to beat would be $4,170.
The six-hour chart shows a triangle breakout indicating that the rally from the December low of $3,122 has resumed. As mentioned earlier the RSI being above 50.00 is also bullish as is the stacking order of the 50-candle MA above the 100-candle MA.
Godbole's view
Based on his analysis Godbole believes: "BTC could rise above the 50-day SMA of $3,940 and extend the rally to $3,170 in the short-term. A UTC close above $4,170 (neckline hurdle + 50-day EMA) would confirm an inverse head-and-shoulders bullish reversal and open up upside toward the psychological hurdle of $5,000. The bullish case would weaken if prices drop below the support at $3,566 (Dec. 27 low)."
Present situation
24 hours ago BTC was trading at $3,816. The low since then has been $3,772 and the high $3,916. So far BTC has not been able to break through the $3,940 level though it came close. At 20:45 Central Standard Time Bitcoin was trading at $3,776. This is down over 2 percent from the open or more than $80. There is no sign of BTC either challenging the key support level yet or of its declining below $3,566. Perhaps a period of consolidation is needed before the next move in either direction. The present price of BTC can be found here.
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