In the last hour or so, Bitcoin (BTC) has taken another leg up in its most recent cycle within a large consolidation range, and has now reached the upper limit of that range. We begin a breakout-or-rejection scenario, likely to play out over the coming day or days.
Looking at the hourly chart, we see that a couple of bounces of the 55-hour exponential moving average (EMA) formed the bottom of an ascending triangle pattern. Bitcoin has duly broken out from here in the hours before time of writing, at about $10,750.
We can see that the volume profile, so far, has not broken the trend of the volume profile despite getting a healthy spike for the breakout. We can see that price is right in the middle of downtrend zone.
To get a better look at this area, we zoom out to the 12-hour chart. We have a clear consolidation structure here, mostly likely a descending triangle (generally a bearish formation). The choice here is clear, Bitcoin could break up here and set a new short term uptrend to go along with the long term one that still obtains; or it could reenter the consolidation pattern after being rejected.
In both cases, Bitcoin’s long term prospects remain good. A breakout process would likely not happen overnight, and would likely involve a retest of the breakout area after a breach. We would also look for a break of the volume profile, with a surge of buying to set the market in order.
Coming back to the 4-hour indicators, we see that the histogram has been arcing up with greater intensity to the positive side - although the current bar (which has more than three hours remaining at time of writing) has cooled off quite a bit. The MACD is (not pictured) itself far on the positive side, and just crossed bullish again - although with waning intensity.
On the RSI, we see that anything less than a complete breakout will probably result in a bearish divergence with price tops. RSI is again in overbought territory here, but perhaps not overbought enough for the purpose of avoid this negative divergence.
Overall, if the histogram cannot maintain its sharp arc up, this attempt may fizzle; but on the other hand, volume can easily come out of nowhere to blow the technicals out of the water. It is well known that big players can move Bitcoin’s price around, and we have seen it countless times during 2019 alone. We’re only a couple hours into the breakout scenario, and anything can happen.
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