Bitcoin Bounces off Bottom of Range, Will the Chop Continue? - Price Analysis

  • Short term: good chance of remaining in the choppy $8.4-8k range
  • Long term: larger trend remains down

Bitcoin (BTC) has taken a tumble in the past couple of days, to the bottom of its local trading range. And as it bounces off of the bottom of this range, we are considering whether or not it will hold, or break through and continue what looks like a greater downtrend.

We start with a detailed 4-hour chart, to visualize the local trading range that Bitcoin has been ping-ponging in for the past three weeks. Using the Volume Profile indicator, we can easily discern the boundaries of this zone between $8,000-8,400.

The rangeBTC chart by TradingView

At time of writing, Bitcoin is again bouncing off the bottom of this range. Bulls are once again stepping in to salvage BTC at $8,000, but there is no guarantee that it will make a full retrace back to the top of the range.

Looking at the 4-hour chart with histogram, it seems like momentum is building to the upside with a sharp arch up on the histogram. However, volume on this bounce is decent at best. We can see that price is snagging at the 8 exponential moving average (EMA, green line) and Bitcoin should at least close above this level during the current candle to counting the bounce rally. Ultimately, we can expect resistance around the 21 EMA, or about $8,140.

8 EMA a good markerBTC chart by TradingView

Finally, turning to a 12-hour chart with indicators, we see the chance for a bullish engulfing candle to form on the candle close, which will probably be closed when this piece goes to press. An engulfing candle (closing higher than the previous candle’s opening price) would be a good signal for the market, and may invite some more buying in the belief that Bitcoin will return to the top of the range.

12-h indicators looking goodBTC chart by TradingView

We see that the RSI trend is holding up here, after a bull divergence on the last two lows. The histogram here is also arching up, and may turn around to retake the positive side of the range within the next few days at this rate.

Bitcoin is looking promising here, at least for the short term. It could stay in this zone for a little while longer, and try again to delay the larger downtrend momentum -- and in doing, it might be best for altcoins, which have taken a pause in their uptrends during this Bitcoin dip. But there is still a chance that the bounce could fail (at the 8 EMA on the 4-hour, notably), and be sent for another large leg down.

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

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