CoinDesk analysis
Omkar Godbole has his usual daily analysis of the price movements of Bitcoin (BTC) on CoinDesk. It was posted at 11:15 UTC. Godpole notes that BTC has a better chance of a significant advance if it can breach the key resistance of $3,600.
Last week BTC, the biggest cryptocoin by market cap, fell to a 15-month low of $3,200 but at the same time the 14-week relative strength index (RSI) went below 30 for the first time since 2015 indicating an oversold situation.
The oversold condition indicates the possibility of a rally. There is also some evidence of bargain hunters starting to buy, a move that could challenge the bearish sentiment. There was a bearish setup indicated by the 3-day candle on Dec. 8 that closed below $3,463 which bolstered an already bearish tending setup. In spite of this, BTC not only did not drop to $3,000 as some expected over the last 72 hours, but briefly reached a high of $3,633. This shows that the bulls still possess a little muscle.
If prices cross the resistance level of $3,633 in the next 48 hours or so, we could see a stronger rally.
At press time for the Godbole article, BTC was trading on Bitstamp at $3,414 even though it had traded as $3,325 earlier in the day.
Chart analysis
The three-day chart shows an “inverted hammer” an event that happens when prices have a short rally during a downtrend. It is often seen as a sign of a potential reversal of a downtrend. The bullish reversal would be confirmed should there be a positive follow-through with the present 3-day candle closing above the $3,633 level on Friday. If this occurs then there could be a rally towards the $4,000 psychological resistance level.
On the daily chart, the 14-day relative strength index posted a higher low as opposed to lower low on BTC’s price. The indicator is diverging in a way that favors the bulls. However, a high volume move beyond $3,633 to confirm a short-term reversal in favor of the bulls.
Godbole’s outlook
Based on his technical analysis, Godbole believes: “A convincing move above $3,633 would validate the inverted hammer candle seen in the 3-day chart and open the doors for a stronger corrective rally to $4,000. A break above $3,633 would also confirm a bullish divergence of the 14-day RSI and open up upside on the daily chart toward $4,400 (Nov. 29 high). A break below the recent low of $3,210 would reinforce the overall bearish view, although oversold conditions on the 14-week RSI could limit the downside around $3,000.”
Present situation;
According to CoinDesk data, BTC opened 24 hours ago at $3,346. Since then it had a low of $3,324 and a high of $3,474. At 18:45 Central Standard Time it was trading at $3,413 up $69 dollars from the open or over two percent. There is no sign of breaking above the $3,633 level but also no break below the $3,210 level. However, the bulls can boast that at least the tendency is up for the day so far. The present price of BTC can be found here.
The appended video is just one of many pessimistic views about Bitcoin. However, even some who are quite bullish on bitcoin do not rule out a further drop before a new large rally.
