Bitcoin price pulls lower toward horizontal support near $560. The outlook remains that the market is engaged in a sideways base formation prior to advance.
Time of analysis: 14h00 UTC Wednesday
From the analysis pages of xbt.social, earlier today:
Price is returning to the consolidation floor today and we watch to see if the support zone above $560 holds.
The 4hr chart has its stochastics (magenta circle, top) falling lower – even before they could group at maximum. Notice how RSI (just below the stochastics) has not formed reverse divergence to the upside on today’s high. This is an encouraging sign since the lack of divergences in RSI implies consolidation – narrowing price range – as opposed to the strongly divergent moves that preceded the late-August sell-off (left-center in the chart).
MACD continues compressing as price works its way into the business end of a contracting triangle. Breaking out above the triangle’s upper trendline (magenta) and the 4hr 200MA should see a rapid advance to $600.
In line with the xbt.social long-term analysis published earlier today, the outlook remains biased toward a continuation of the long-term uptrend. Although less likely, the risk remains that the market will fall into a final sell-off. In this case, price decline below $550 will imply a $500 target and (depending on its speed) force a re-evaluation of long-term trend.
Best to sit out until the chart confirms trend by breaching either $600 or $550.
The analysis outlook remains the same until the ongoing consolidation resolves: If the market can keep price above the $550 support zone we may be looking at the formation of a base pattern prior to an advance toward $680. The smart strategy in the current chart is to wait for price to advance above $600, since that will open the way to $680, while allowing the market to go through the motions if it is indeed building a base pattern for advance. Patience.
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