/latest/2019/12/bitcoin-bounces-on-2018-consolidation-support-bull-flag-forming-price-analysis/
Bitcoin Bounces on 2018 Consolidation Support, Bull Flag Forming — Price Analysis
Bitcoin (BTC) yesterday bucked its (seemingly interminable) downtrend, reacting just as it came in contact with the central consolidation knot from its 2018 market. The bounce so far has not translated into something more extensive, although it is looking promising that this may occur within the next day. We wait for a daily close today for a bit of confirmation.
Starting with the daily, we first note the blue band of support which has caused two reactions in the Bitcoin price. This band is derived from the final consolidation of the 2018 bear market around $6k, just before Bitcoin’s market dumped nearly 50% (inset above).
We can see that the market is very clearly aware of the 21 EMA, as price closed yesterday exactly at this level. We can also presume, then, that it is also aware of the 8 EMA, and if Bitcoin can close the day holding above the 8, we could see further upside. This would also lock in a bull divergence on the daily chart, which will be a further boon to market confidence.
Moving to the 4-hour for more detail, we see what looks like a bull flag. Sell volume has not matched yesterday’s buying, and a shallow retracement was held at the 0.382 level. This suggests strength, as a weaker movement might close at the 0.5 or 0.618 retracement levels. We see that buying came in as soon as price got into the clutch of EMAs under $7,100.
On a 4-hour chart with longs/shorts/BTC dominance, we can see that shorts have taken a big hit since the bounce, on the Bitfinex exchange. This shows that some sell pressure is leaving the Bitcoin market, which will make moves up easier.
Furthermore, Bitcoin dominance has been rising lately, after retreating from notable highs above 70% this Q3. Generally, Bitcoin dominance has not been this high in quite some time. But this does not necessarily suggest Bitcoin strength in itself: the dominance ratio may rise even as total market capitalization falls
Overall, Bitcoin is looking well set up for another leg up if it can hold these levels. However, we must recall that Bitcoin is still very much within a larger downtrend – and “the trend is your friend.” The current price action is only a first potential step toward changing that.
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
