Bitcoin (BTC) yesterday broke out of its local market structure, and well above $8,000 in what is looking ever more like a long term reversal. The indicators look stellar in the short term, although we should definitely be expecting more selling to come in soon. This is a perfect start to a bullish 2020.
Starting on the 4-hour chart for a close view of the action, we see the breakout level at $7,600 has been added to by about 10%. The indicators are humming along: volume has only increased as the breakout progressed, as has RSI strength on this timeframe; the histogram has also added higher peaks and increased bullish expansion on the move up.
This is an extremely healthy push up, and although the indicators are technically overbought, this uptrend could probably put in at least one more leg up before a selloff comes. We can see on this current 4-hour candle that the 8 EMA has been almost tested and has held. But price is now dangerously extended from the EMAs, and a correction should come soon, likely within the day.
Moving to the daily, we see that the RSI is approaching technically overbought conditions; but it is not yet even within this technical range. And given the strength of this surge, we could easily expect the rest of the channel to be filled in up to $8,800.
The histogram here is starting to cool off at time of writing, but the daily candle has some time left before being painted. Volume is also on track to at least match yesterday’s bullish day. Overall, we are likely to see heavy selling coming in around $8,800 if not sooner.
On the weekly, we see Bitcoin really turning around, with a histogram contracting sharp bullish only days before it is painted on the chart.
Closing above the 21 EMA would be extremely bullish and likely signal a long term reversal (although we can see the fakeout from October along the same lines), and also that the RSI is reapproaching what seems to be a key level at 56.
Bitcoin is looking great. The surge is strong and healthy, and could well inaugurate a bullish 2020. Time will tell if it does.
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