Bitcoin has been bearish in 2014. It has been choppy, but since June’s high of 683, it has been making lower highs and lower lows, falling to a new low on the year at 275 in October.
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The Current Bullish Correction:
Note that price has rebounded from 275 in the sharpest bullish correction since falling from June’s high. The thing is, the daily chart is still bearish. Currently, with price holding below 415, price is holding below a falling speedline, below all the 200-, 100-, and 50-day simple moving averages (SMAs), and the daily RSI is holding below 60, showing maintenance of the prevailing bearish momentum. For the most part it looks like bitcoin should be ready to continue the bearish trend and at least head back toward the 300, and 275 lows.
The 4H chart should help us develop the technical assessment of the current bullish correction.
1) We can see that price has broken above the SMAs and thus has established some short-term bullish bias.
2) The 4H RSI has tagged above 70, and is holding above 40, showing maintenance of October’s bullish momentum.
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The Bearish Continuation Scenario:
In order for a bearish continuation, we should first observe that the 4H RSI fall below 40. Meanwhile, price should clear below the 347 support.resistance pivot. Then if it pulls back up, it should find resistance by the cluster of SMAs between 368-388, with the final line of defense around 400. If price can respect 400, the bearish mode should be in play ,and price should be heading back to the 300 and 275 levels.
Bullish Correction Scenario:
Now, if price action starts the week pushing above 400, the current bullish correction mode might not be over and could extend during the week. A break above 420 would open up further upside. Looking back at the daily chart, the next 3 key resistance factors, which were all around support/resistance areas are:
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