After two days of vicious selling, Bitcoin (BTC) put in a decent day’s worth of defense yesterday and held above a critical level. That makes today’s candle interesting, to see if it will hold for a third consecutive day; and perhaps start to stymie this bloody downtrend.
We start on the daily chart and take note of the 200 simple moving average, which Bitcoin closed above for two days in a row. Yesterday’s candle closed looking like a doji or spinning top, which can serve as a classical reversal candle under the right conditions (at can also be a perfect continuation candle, though!).
Bitcoin is currently trading below that mark, and below the entire block of support that was lost in a single day. If it can’t hold on to the 200 SMA, the next clear support starts at about $8,400; if it does, we might start to see some counter-trending price action.
Moving to the 4-hour chart, we see the inklings of a bull divergence showing up on the RSI. IF we see a local bottom around here, it might result in a small relief rally and perhaps stabilization around this area. After days of selling, the likelihood for some local upside is growing.
The histogram is chopping hard to the downside, and the arch back down is looking like the bearish expansion may need to continue in order to bleed off the rest of the downward momentum.
Finally, getting our bearings on the weekly chart, we see that all of this downside has taken a bite out of the retracement scale – but not canceled it.
We’re almost into “Golden Pocket” territory, starting at .618, and thus there is still a viable case for a higher timeframe uptrend remaining intact. But it is starting to look shaky, and we need to find support soon in order to preserve an overall higher-low. We would not want to see $8k break, ultimately.
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