Bitcoin has been falling this week. After making a high around 249 over the weekend, btcusd formed a double top and started sliding.
The decline came in 2 major swings. First price stalled just above 240 and started to trade sideways. Then, during the 5/14 session, we saw another strong bearish swing to bring price to about 234. In the 1H chart we can see that here, bitcoin was testing a falling channel support. During the transition from the 5/14 to 5/15 global sessions, we saw a quick spike down to almost 232 before buyers bid up the cryptocurrency again.
Now, the 1H chart does still show some bearish bias as btcusd trades under the 200-, 100-, and 50-hour SMAs and as the 1H RSI fell below 30. However, when we look at the 4H chart, we will see that there is a bullish bias, and the current “channel” could be just a flag pattern. If we get a rebound to 240, we will get more clues to whether the market will indeed continue its short-term uptrend. If it does not cross 240, we are likely in a bearish development. Above, 240, we will likely see bitcoin test the “channel” or “flag” support, with risk of breaking higher, which would put the 249/250 area back in sight.
In the 4H chart, we can see that this week’s falling channel is still within a rising channel started from the 214 low in late April. Price is still holding at the rising channel support. Also note that after testing the 200-period SMA, btcusd is still holding above it, which shows that the bullish bias is still in play.
We discussed the bullish scenario before, but if price falls below 232, we need to consider the bearish outlook, which would open up the 214 low.
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