CoinDesk analyses
Omkar Godbole has two articles on Bitcoin today on CoinDesk. The earlier article posted at just 9:13 UTC noted that the Bitcoin rally is continuing: “Bitcoin’s (BTC) relief rally gathered pace on Thursday, pushing prices to two-week highs above the psychological hurdle of $4,000.The cryptocurrency rose to a high of $4,067 at 09:06 UTC – a level last seen on Dec. 4 – according to CoinDesk’s Bitcoin Price Index (BPI). Its market capitalization also hit a two-week high of $70 billion.” As the article went to press BTC was trading at $4,000. This was up 28 percent from the 15-month low of $3,122 that happened earlier this week.
The second article posted at 12:57 notes that the ongoing rally faced an obstacle on its progress towards the $5,000 level according to technical charts. Godbole points out that early in the day the price of BTC rose to $4,108 a two-week high. This validated the short term bearish-to-bullish trend that had been signaled earlier in the week.
The rise above the $4,000 level he thinks is sustainable as the volume has jumped to a one week high above $8 billion. More bargain hunters he believes could join in the buying spree creating more upward pressure on the price. However, the rally could stall as it approaches the $4,400 level for some time as the area around that number is packed with key technical barriers.
Chart analysis
The daily chart shows the three barriers that face the continuing rally above $4,000. The 50-day exponential moving average at present is at $4,402. Secondly, the bearish lower price high of Nov. 29 is at $4,410. Finally the 38.2 percent Fibonacci retracement of the sell-off from the Nov. 7 high to the Dec. 15 low is at $4,430.
The relative strength index (RSI) on both the hourly and 4-hour charts are now reporting overbought conditions whereas before the rally they were very much oversold. It will be hard for BTC to move through the $4,400 to $4,430 resistance zone without more than one try. A minor consolidation or a pullback from level at the time of posting $4,040 will see the RSI roll over from the overbought territory it is in now and realign it in favor of the bulls. This would actually help the price pierce through the resistance area. A quick move through that resistance could yield a sharp rise to the $5,000 level.
Godbole”s outlook
Based on his analysis Godbole’s view is: “Bitcoin may find it hard to beat the resistance zone of $4,400-$4,430 in short-term. A high-volume daily close above $4,430 could be followed by a quick move higher to $5,000. The prospects of a rally to $4,400 would drop if BTC falls back below Wednesday’s high of $3,924. A daily close below $3,633 would invalidate the bullish setup.”
Present situation
24 hours ago BTC was trading at $3,709 according to CoinDesk data. It has reached a low of $3,645 since but the high has gone up to $4,160 far over the $4,000 barrier. At 18:30 Central Standard Time the price was still at $4,025 a gain of over $300 from the opening price or more than 8 percent. So far the price has not reached any of the resistance levels noted by Godbole. Perhaps Bitcoin may spend some time consolidating and dropping somewhat before it resumes an attack on the resistance levels. The present price of Bitcoin can be found here.
