Bitcoin Claws Back Above 21 EMA, Reversal On the Table — Price Analysis

By December 29, 2019 Bitcoin Business
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Although still within a larger downtrend, Bitcoin (BTC) has seen growing strength over the holiday (for many) week, and is now scratching against and important 2019 resistance level. If it breaks that, we might see prices well above $8,000, all within a larger downtrend.

We start on a 3-day chart to locate the current resistance level’s origin. Price action from both May/June and October was supported around this level, with previous support now turned resistance. With Bitcoin trending downward in a general channel, breaking this level could see the leading crypto make it to the top of that channel around $8,700.

Room within the downtrend
BTC chart by TradingView

RSI on this timeframe has not been specifically bullish lately, but rather pretty neutrally corresponding with the downtrend. The histogram has just crossed positive after a solid December defense, but the buildup was pretty choppy. This means that we do not see overt signs that Bitcoin will break the resistance.

If we move to the daily chart, however, we do actually see clear signs of strength that might lead us to believe that the resistance might be taken. We have recently seen a prominent bull divergence on the RSI, and higher highs on recent histogram peaks. We also see the histogram contracting up bullish, already well within positive territory.

Will the 21 hold? 55 rejection
BTC chart by TradingView

More, the 21 EMA has been retaken and closed-above. The last time this happened, about a week ago, it was quickly re-lost, so if the 21 can be held for a few days it should signal a new strength. In the short term, we can probably expect an initial rejection at $7,635 or thereabouts, at the 55 EMA. Volume has fallen during yesterday’s trading, however, which does not speak explicitly well in favor of a surge; we wait for today’s close.

Finally, on the 4-hour chart, we see that $7,500 should be an important price level and, perhaps, the level to break. This is because the previous local high, from December 18, was sold off there; and because the local market structure’s 0.618 level is precisely here. If Bitcoin can break that level, it will signal general bullishness.

Breaking $7.5k should see more uptrend
BTC chart by TradingView

The histogram here looks pretty good, with a strong potential to continue expanding bullish at an accelerating rate, and putting in a higher peak. Volume has started to come into what may be a continuation of the impulse up started on December 28.

Things may be heating up for Bitcoin for the short term. Although still within a downtrend long term, there exists the potential for plenty of upside even within that downtrend. And then, of course, there is the added possibility to break that downtrend altogether just in time for 2020 – but this, at least for now, is not our concern.

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

Featured Image Credit: Photo via Pixabay.com

Bitcoin
Bitcoin
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