Bitcoin price is stuck inside a resistance zone. A skylight (and escape rally) is $20 above current price ($450 Bitstamp) but the market is turning its toe in the sand, and leaving the indicators to revert to neutral.
Time of analysis: 15h00 UTC
From the analysis pages of xbt.social, earlier today:
Yesterday’s analysis considered long-term horizontal support and resistance (S&R) zones in the 1-day candle price chart since April 2014. Today we look at 2016 price action in the 4-hour chart. The same S&R zones are shown, with the addition of a diagonal support level below the rising price pattern from the January 2016 low. This ascending level represents a Fib line that originates at the January 2015 decline low. Strong support.
Price is currently trading inside of the red resistance level just below $470. The significance of $470 is that it is the level of the 0.382 Fib retracement level of the entire 2013 rally.
The market has been having difficulty getting above $470. Depending on how you classify an “attempt at advancing above resistance” there have been between 3 and 7 advances on the resistance zone near $470 during the past two years – most of them during the past six months and the latest attempt was made last week.
When and how the market will surmount this level remains to be seen. The best attitude that traders could adopt is to wait for the market to settle the matter, and to then open positions into the subsequent trend.
Getting above $470 – and both opening and closing a daily price candle above this level – will be an initial confirmation of advance. The next higher resistance level – and advance target – is around $550.
As we frequently remind ourselves, price will not run straight to $550 and one of the rally’s corrective waves is likely to return to $470 from above to test its support.
The conditions of this advancing scenario will remain true whether the market mounts $470 now, or only later in the year.
Repeated failure at breaking above resistance often leads the market to a sell-off – in frustration – in search of a lower support level in order to regroup, and attempt the advance differently; or to perhaps bounce from strong support and use the momentum to breach the resistance layer.
Again, traders and long-term investors should wait for the chart to indicate this market scenario by falling below the confluence of the ascending blue trendline, the 4-hour 200-period moving average (red) and the 1-day 20-period moving average (not shown). Their general area of overlap is currently near $440 straight below price.
If the market resolves the current stalemate into decline, then price will find initial support at the orange zone near $370. However, the effect of decline to $370 will turn indicators to bearish bias in the larger timeframe charts and a deeper decline to $300 may ensue. Hopefully, such a decline will be rapid and cause sufficient bounce momentum to launch price above $470 within hours or days.
The analysis outlook remains biased to a bearish outcome – that price will decline to support (at least $400 but more likely $300, Bitstamp) before advance to a new high occurs. This view is based on the technical analysis outlined above.
When confident advance ignites, whether sooner or later, it has a primary target at $550, and a secondary target at $690.
Markets reward those who are patient, so, wait for the chart to confirm the market’s resolution, as discussed above, and only then open your position.
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Bitcoin price charts from TradingView.
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