It looks like Bitcoin (BTC) is beginning to move, after struggling to stay within a consolidation pattern. BTC may soon break up to the top of the pattern, which would keep it out of the danger zone for a little longer – but this is not yet confirmed and heavy selling has dampened the push.
We start with the 4-hour for a detailed picture. Price is currently testing a sub-downtrend resistance – a sub-structure within the larger consolidation structure (see below) – as well as the 55 exponential moving average (EMA).
Volume has clearly broken trend on this sub-structure (Bitstamp), although much of it was aggressive selling above the trendline. Volume has dropped off since the lone bar, and more needs to come in now in order to get the crypto squarely back into the larger consolidation pattern – and out of danger.
We move now to a 12-hour chart to understand the larger structure. Here the smaller structure, currently being challenged, is seen as the bottom of the down cycle in a much larger sideways triangle consolidation, with its own larger diminishing volume profile.
Here we again see a likely sell target around $11,300-400. The 0.618-65 “golden pocket” Fibonacci retracement level lies here, as does the important recent resistance level of $11,200-ish. Volume at this level has also been high in the last two months, as seen on the volume profile indicator (VPVR).
The upshot of all of this is that, moving back to the top of the larger consolidation pattern would keep Bitcoin away from the important uptrend line that it’s been threatening to lose in the past week or so.
If we return to the 4-hour indicators, we see some solid but not convincing signs that the break up will follow through. We see a trend break (up) on the RSI downtrend on this timeframe. However, price has so far not closed at a higher level, and this could result in a hidden bearish divergence, which would suggest a trend continuation at this timeframe – in this case down. What’s more, the histogram already looks to be arcing down before the MACD can breach into the positive side.
Traders should keep a close watch during this time, to try and catch a breakout play one way or another. Volatility is almost surely coming soon to a Bitcoin near you.
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