Bitcoin Price Analysis: Buckle up Bulls, More Losses Lie Ahead

By
January 28, 2019

The bitcoin price on Monday depreciated as much as 4.74 percent against the US dollar after breaking out of its two-week long consolidation period.

At 20:00 UTC on Coinbase, BTC/USD was trading at $3,415, down 3.31 percent from today’s opening rate. The pair confirmed a downside break of its near-term bearish pennant formation. As it did, it also broke below a crucial support level at $3,460, which had capped a strong downside action on November 25, 2018.

Bitcoin’s Technical Outlook Remains Weak

BITCOIN 1D CHART | SOURCE: TRADINGVIEW.COM, COINBASE

Technically, the breaking of a bear pennant formation to the downside signals an extended selling action. It eventually leads to a bear flag formation. In recent days, the bitcoin market was in a brief pause, and its sudden reassertion in the direction of the previous trend marks the beginning of another bearish cycle. Should it happen, the bitcoin market will attempt to form a double bottom above $3,000.

Meanwhile, the Relative Strength Indicator (RSI), also dipped below 40, which is considered a robust selling region. In the worst case scenario, the momentum indicator could go below 30 – an oversold territory – before correcting higher to form lower highs.

Bitcoin’s 50-period moving average curve (depicted in blue) has been capping the upside attempts since November 2018. Therefore, on a jump from the next support, breaking above the 50-period curve on the daily charts could establish a durable floor for the next uptrend – whenever it comes.

Bitcoin Price Intraday Analysis

BITCOIN 1H CHART | SOURCE: TRADINGVIEW.COM, COINBASE

For today, the bitcoin price trading range we are watching is defined by $3,466 serving as interim resistance and $3,374 as tentative support. Though a narrow range, it provides us with decent intrarange opportunities to kickstart the day. That said, we are first entering a short entry towards interim support while maintaining our stop-loss order at $3,431.

On a bounce back from $3,374, and if the volume indicator goes strong as well, then we will open a long position towards $3,466. Similarly, a pullback from $3,466 would have us open a short position towards $3,374. As we play on these interim trend reversals, placing a stop loss 1-pip against the direction of the trade would minimize our risks.

In the event of a breakdown action, such that bitcoin breaks below $3,374, we will open an extended short position towards $3,219 (visible in the 1D chart above). A stop-loss maintained just 1-pip above the entry position would define our risk management strategy.

Conversely, a breakout action, such as if bitcoin breaks above $3,466, would allow us to open a long position towards $3,523, our upside target. We will maintain a stop loss 1-pip below the entry position to ensure we exit our trade on a small loss in case the bias reverses.

Featured Image from Shutterstock. Charts from TradingView.

Tags: Bitcoin