A few days after losing an important uptrend support line, the Bitcoin (BTC) market seems to have decided to reverse course and retake this support line. The leading crypto is consolidating within a number of possible patterns, and a short term reversal back up seems to have been effected.

We first look at a 4-hour chart, and see what could have easily been a bear flag broke last night on rising volume. A decent amount of volume has come in, and we see a first leg has reached the lost uptrend (diagonal blue band).

See how the retest goingBTC chart by TradingView

If this precise uptrend support zone holds, we could easily see another leg up to the top of whichever pattern Bitcoin is in.

Moving to the daily chart, we can see the larger forces at work in Bitcoin’s price action. The continuously declining volume first of all signals a consolidation, as price sobers up from the late June top near $14,000.

Some kind of consolidationBTC chart by TradingView

We can see that this is the third or fourth time, depending on how you count, that Bitcoin has tested the support level in the low $9,000 area. After the latest breakdown below the large uptrend (bold red line), we could say that the pattern looks more like a descending triangle than what it resembled before: a sideways triangle pattern. The difference is that the former is generally bearish, although this expectation is simplistic and often does not pan out (a “meme pattern”).

At any rate, another leg up will see Bitcoin re-encountering the downtrend support area of that pattern, starting near $11,300 and up. Selling could come in here and see Bitcoin continue consolidating; or it could break up and out of consolidation completely. We’ll worry about that when we get there.

We see the 33-day exponential moving average (EMA) charted here (purple), because it has been the key moving average of the 2019 Bitcoin bull market. During H1, price was held at this level, and it has now become an important inflection point for Bitcoin’s corrective period. It is worth watching this moving average and how price interacts with it; if it holds this level today and in coming days, we could see another leg up.

Finally, turning to the 3-day to refresh our view of the larger picture, we can see that no matter what the scope of Bitcoin’s retracement, it still resembles a giant bull flag. The long term uptrend for 2019(-20?) remains intact at this time, and we are still nowhere near invalidation of that uptrend.

Still a giant bull flag / pennantBTC chart by TradingView

Indeed, the indicators on this timeframe bear this narrative out. A clear hidden bullish divergence on the RSI speaks to a trend continuation (that is, up). A higher low on the latest histogram lows also implies a waning in selling.

The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.