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Bitcoin reaches up over $300 today after sharp drop down

CoinDesk analysis

Sam Ouimet analyses Bitcoin’s price movements today on CoinDesk up until the article was posted at 18:58 UTC. He notes that Bitcoin has risen over $300 since today’s low. It has its sights set on a technical resistance which if broken could result in an even stronger push up analysis would suggest.

The climb began at 15: 00 UTC, invalidating the narrow trading range between $3,580 and $3,630. This move happened just above the previous resistance from December 18 of $3,550 a level that now seems to have switched to support since this latest bounce up.

It appears that the bulls would like to continue their rally from just eight days ago when prices pushed above $4,000 but ultimately failed after a holiday sell-off from the peak reached of $4,236 on Xmas eve. As Ouimet’s article went to press BTC was trading at $3,842 according to CoinDesk data.

Chart analysis

The daily chart shows that the price of BTC has been reacting positively to several technical hurdles. The price bounced on a confluence of support including the likes of the daily Bollinger band basis line, 61.8% Fibonacci retracement, as well as the prior support and resistance area near $3,500. To further continue the rally towards the $5,000 level BTC’s price must scale the inverse head and shoulders pattern. The pattern could be described as three successive troughs, the middle or head is the deepest. If BTC’s price can find acceptance above the neckline the reversal pattern should take effect. This should send the price up towards $5,200.

The hourly chart further shows the recent bullish development. A bear flag, which is a bearish continuation pattern, has formed inside a falling wedge. This is a bullish reversal pattern.

The latest run up by Bitcoin has no doubt invalidated the bear flag. The price now has different resistances in its immediate path in the form of moving averages (MAs).

The price so far has been able to rise above the 100-hour MA. This will encourage short term bulls but the price has yet to rise over the 200-hour MA. The relative strength index on the hourly chart is now much overbought, so there could be a period of consolidation or even a minor pullback in the near term.

Ouimet’s outlook

Based on his technical analysis Ouimet believes: ” The daily chart depicts an inverse head and shoulders pattern that could yield a rally to $5,000 and perhaps beyond if its neckline is successfully scaled. The hourly bear flag has been invalidated, further easing the bearish concerns for now. Acceptance below the most recent higher low of $3,567 will invalidate the bullish reversal set up and likely bring the most recent lows of $3,130 into play.”

Present situation

24 hours ago BTC was trading at $3,606 according to CoinDesk data. Since then it has hit a low of $3,558 but a high of $3,945 coming close to the $4,000 psychological barrier. At 13:10 Central Standard Time the price was at $3,918 a rise of over 8 percent over the open or more than 300 dollars. The trend seems still up for now so perhaps within the next 24 hours BTC will be back over $4,000. However, there could also be a consolidation or even drop before a further run above $4,000. The present price of Bitcoin can be found here.

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