Bitcoin – Rising Channel Signaling a Bullish Reversal

0
30
Bitcoin - Rising Channel Signaling a Bullish Reversal
Trend Shifting:

Bitcoin price action turned shifted from a downtrend to a sideways one at the end of January. However, in March it tried to continue the bearish trend without success because it rebounded at the end of April. Last week, the cryptocurrency started to shift from the sideways mode into a bullish one. With a rising channel seen in the 1H chart, btcusd is signaling a bullish reversal.

Bitcoin (BTCUSD) 1H Chart 5/24
bitcoin05242015h1
(click to enlarge)

Bullish Conditions:

Note that in the 1H chart, price has started to trade above the 200-, 100-, and 50-hour simple moving averages (SMAs). These SMAs are also sloping up and in bullish alignment. The RSI has tagged above 70 and held mostly above 40, which shows development of bullish momentum.

Support for a Bullish Trend:

Now, it looks like there is resistance around 243 as we begin the week. This misses the rising channel resistance and might be a clue that bulls have lost steam. This means, the channel support will be vulnerable. But that does not necessarily mean the market will turn bearish even if price breaks the channel support. We should still look for support in the 237-238 support/resistance pivot area, especially if the RSI is around 40.

Now, a break below 236 might put the bullish reversal outlook on the shelve.

Bitcoin (BTCUSD) 4H Chart 5/24
bitcoin05242015h4
(click to enlarge)

Key Support Against Bearish Continuation:

Looking at the 4H chart, we can see that after a rally from 214, price is now anchoring above the 228-229 area. This means, if price falls back below 228, the bullish attempt would be a failure. A failed bullish reversal would be a strong signal for a bearish outlook and revive the downside risk first towards the 214 low with the psychological level of 200 in sight as well.

Bullish Targets:

If price action maintains last week’s bullish mode, the next resistance will first be the May high around 249 up to the 250 handle. Above 250, there is a possible resistance around the 280 area, which is where the 200-day SMA resides, but there is upside risk to the 300-315 key resistance area.

Previous Post by Author: Key Fundamental Factors this Week (5/25 – 5/29)

SHARE
Previous articleCircle Plus Payments Launches Android and iOS Mobile Payments Apps
Next articleEUR/JPY – An Examination of Shifting Outlooks
Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.