Bitcoin (BTC) has put in a solid, small uptrend in the past couple days, after bouncing (dangerously) off of a strong support zone for the third time. In doing so, the leading crypto has extended a consolidation pattern, and may soon have a shot at breaking out of it to the upside.
Starting with the daily chart, we see that volume almost doubled yesterday versus the prior day, as new buyers came in and some took profits. Price closed above the important 33-day exponential moving average (EMA), which we have often highlighted here as an important level in the 2019 market.
The leading crypto is now only a few hundred dollars away from the downtrending resistance line that defines the top of the consolidation pattern currently containing Bitcoin. If price gets there, starting at about $11,000, we will have a breakout-or-rejection situation to watch.
Moving much closer to see the action, we see on the hourly chart that a bearish divergence has showed up on RSI highs; but also that a hidden bullish divergence is visible on RSI lows, leaving us to look for other indicators.
The histogram looks pretty stable here, after having flattened out on the downside. When we get a couple of upticks on this chart, we might expect another Bitcoin leg up to the top of the pattern. We should note the strong buy volume on the second leg of yesterday’s price action, and that sell volume has not responded in kind. Price is currently struggling to stay above the 21 EMA here, but if it can, we could see that next leg to $11k.
Finally, we move back to a 2-day chart to get the overall lay of the land. We see that volume continues to fall overall, confirming a general consolidation. The form of this consolidation is looking more like a descending triangle now. This is a bearish pattern, suggesting a breakdown; but chart patterns are not a science and it suffices enough for now just to call it a consolidation.
The red uptrend line, pictured, was lost and quickly retaken. Perhaps this line will squeeze the consolidation pattern and provoke a break out and up, after the bulls have again showed their defense of the low $9,000s. On the other hand, supports often weaken after multiple retests. But we should still remember that, in the long term, Bitcoin is trending up – and the trend is your friend, as the saying goes.
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