While the short Bitcoin price rally was powerful and sweet, the overall picture for cryptocurrencies remains bearish and barring the occasional oversold bounce or two, crypto looks set to resume its bearish trend.
Crypto provided a nice relief rally leading up to Christmas Eve before traders decided to take profits and focus on eating, opening presents and spending a little quality time with family.
Analysts are now forecasting that Bitcoin price 00 will dip to or below $3,000 and one former International Monetary Fund economist cautioned that a drop below $3,190 represents the ‘GTFO’ point for Hodlers and day traders alike.
Of course, at Bitcoinist we remain impartial and objective. Our job is to simply report the news and provide an assessment comprised of market sentiment, current events, and technical analysis. Maybe Bitcoin will revisit $3,100 – $3,200 and bounce to $4,000 – $4,500. Maybe Morgan Creek Digital Assets chief Anthony Pompliano is right and Bitcoin will dip below $3,000 before finding that ever elusive ‘bottom’. Only time will tell.
Let’s take a look and see.
Bears capitalized on Bitcoin’s repeated failure to gain above $4,240 and the ensuing bear break raises the stakes for Bitcoin as a revisit to the recent low at $3,128 increases. The most immediate support rests at $3,436 and while the 4-hour chart shows an oversold Stoch and RSI, the weekly chart shows both oscillators have room to fall.
As always, there is the possibility of an oversold bounce but calling that is like spotting a meteor as it fragments in the Earth’s mesosphere. Traders can keep an eye on the daily and weekly MACD and Stoch for a bull cross, along with bullish signals on the 12 and 26 EMA on the daily and the 5 and 10 MA on the 4-hour chart.
In the event of a bounce, BTC price needs to sustain above $4,239 to point toward a trend change and anything below this point is merely a lower high.
That’s the bad news. Now for something positive.
There appears to be a slight head and shoulders formation with a neckline at $4,160 solidifying on the daily chart. A move above $4,040 would place BTC above the 61.8% Fib retracement level, and further gains above $4,100 would be convincingly bullish as BTC would trade above head and shoulder neckline and also above the 78.6% Fib retracement level which aligns near the lower arm of the recent ascending trendline and the 50-MA.
Alternatively, completion of the right shoulder at $3,475 could produce another bear break that might drop BTC price back to $3,200 and below. Further consolidation at the current range is a possibility but given the declining bull volume and the sharp decline in BTC price, a more decisive move appears to be in the making, one that is likely to be on the side of bears.
A quick glance at the Bitcoin shorts chart shows bears haven’t entirely made up their minds either. Perhaps everyone is waiting for the CME futures to close this Friday while also stocking their liquor cabinets for the upcoming New Year’s celebrations.
Happy New Year all!
[Disclaimer: The views expressed in this article are not intended as investment advice. Market data is provided by Coinbase and Bitfinex. The charts for analysis are provided by TradingView.]
Where do you think Bitcoin price will go over the weekend and holiday? Share your thoughts in the comments below!
Images courtesy of Shutterstock, Trading View. Market data sourced from Coinbase, Bitfinex
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