Fresh into the new year, Bitcoin (BTC) has been moving sideways and mostly trendless on the medium term since mid-/late-December, and down in the very short term. Volume has dropped very low, which often signals the end of a consolidation period, which Bitcoin looks to have been chewing through since December 19. We should be on the lookout for a bigger move soon, potentially out of the pattern – or at least to the top of it.
We start on the 4-hour chart for a general view, and observe the reduced volume, which has been generally falling throughout late December. We also observe a general sideways triangle pattern (possibly a running triangle, to be specific), and that price is chewing through the bottom of this pattern at present.
Price is so far bouncing here, and we are in fact seeing volume start to tick up. Thus, we are currently in a bounce/breakout scenario, with price hitting both the local support and the triangle’s uptrend line.
Coming down to the hourly, things don’t look good for a bounce. The RSI is showing no strength here, no divergence from price, and the histogram has started arching hard to the downside again after a feeble rejection at the 21 EMA.
We do however see a higher low on the histogram from recent price action, which may be counted as a divergence. But even the volume on this timeframe has barely come in to support Bitcoin at the bottom of this pattern – perhaps more support will come in within the last $100 to $7k.
Finally, looking to the daily, we see that a move down would not really be unexpected. It also may not be disastrous, with a bull divergence on the RSI giving plenty of wiggle room for the crypto to drop further and still be within trend. Bitcoin is currently trapped under all of the EMAs, which does not bode well for holding.
If we do lose the current structure, it is likely that we’ll see a further testing of the huge block of support that goes all the way down to $5,700. This block is comprised of the final area of consolidation from 2018, before Bitcoin’s huge capitulation to almost $3,000. Holding the daily RSI trend may be the true test of Bitcoin’s 2020 direction.
In all, Bitcoin looks pretty bearish up to the mid-term. The long term is still a more open question.
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