Bitcoin (BTC) is a few days into its massive surge from the low $7ks, and the market is waiting to see the next move -- namely, for a confirmation of a larger uptrend. There has been some intense bull defense in the past day indicating that they retain some control of the market, even as things start to point downward after a very neutral consolidation.
We start on the 1-hour chart to get a granular view. Up until last night, Bitcoin had been respecting a triangle pattern. Price fell out of the support line last night, but bulls flooded in to defend it just when it looked ready to fall.
But overall, price is starting to trend down a little bit, where there was no trend before. BTC is now stuck under the 55 EMA. Volume has trickled to nothing, marking this consolidation as more or less complete and making us expect a larger move soon.
Looking at the 1-hour histogram only, we can’t be sure that price will actually drop for a deeper retracement (more on this later). Indeed, the histogram broke to the downside early this morning (October 30, UTC), but the bars are staying pretty flat and may be starting to tick back up.
Moving to the 4-hour chart, we consider the possibility of a deeper retrace than has already been completed. First, we note that price is currently ranging within the support zone from the summer’s massive consolidation. The next support down is the resistance of the previous consolidation structure, from October.
It is interesting to note that that support begins exactly at the 0.5 Fibonacci retracement level, and continues down exactly to the Fibonacci “golden pocket” level. It also begins exactly at the 55 EMA. Thus, there are plenty of reasons to anticipate support around here. Given how dramatically this resistance was broken on the way up, it is unlikely to be broken on a retracement. Ultimately, all we really need is a higher high to keep the bullish profile.
Finally, with the 4-hour chart plus indicators, we see that the Stochastic RSI is stuck on the bottom of the range, supporting a slight downtrending bias in the short term. The histogram has been unable to start ticking up at all, although it’s still putting in a higher low. We need to see some turnaround here.
Overall, there seems to be serious bull support to maintain Bitcoin’s level around here; but on the other hand, momentum to the upside is currently lacking. With a slight downtrend seeming to form, we may get some more retracement down toward the golden pocket. But given the larger picture, we should expect that to hold.
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