Bitcoin’s eight-day stretch of consolidation appears to be like to have weakened the prospects of a drop again to December lows close to $3,100.
The main cryptocurrency by market worth has been restricted to a slim vary of $3,500 to $3,700 since Jan. 11.
That vary play is considerably stunning, as BTC had set the stage for a fast slide towards December lows close to $3,100 with a 9 % drop on Jan. 10 – the largest single-day decline since Nov. 24. Notably, costs fell to $3,500 that day, erasing the hard-fought positive aspects of the previous two weeks.
Regardless of the sharp bearish reversal, a convincing break beneath the psychological help of $3,500 has remained elusive for eight days.
That may very well be thought of an indication of sellers unwilling to supply the cryptocurrency so low within the bear market. Put merely, the likelihood of a drop to December lows has diminished, courtesy of the vary sure exercise.
In consequence, vary breakout and a re-test of $4,000 may very well be within the offing. As of writing, the cryptocurrency is altering fingers at $3,620 on Bitstamp.
Day by day chart
As seen above, BTC fell sharply on Jan. 10, confirming a bearish doji reversal. The relative energy index (RSI) additionally fell again into bearish territory beneath 50.00.
Nonetheless, the psychological help at $3,500 has held floor.
The descending triangle breakout on the hourly chart may very well be thought of proof of bear failure at $3,500 leading to constructive value motion.
Extra importantly, the triangle breakout has opened the doorways to $3,724 – the neckline of the inverse head-and-shoulders sample.
A transfer above $3,724 would affirm a bearish-to-bullish development change on the hourly chart and permit a stronger rally to $4,000 (goal as per the measured transfer methodology).
- BTC’s vary play doubtless represents bearish exhaustion.
- An inverse head-and-shoulders breakout, if confirmed, would open the doorways to the psychological hurdle of $4,000.
- Acceptance beneath $3,500 would reinforce the first bearish development (downward sloping 10-week MA) and enhance the likelihood of a drop to $3,122, though this state of affairs now appears to be like much less doubtless.
Disclosure: The creator holds no cryptocurrency belongings on the time of writing.