Bitcoin price has decided to take a breather as bulls and bears fight to take control of the $18,200 to $19,500 range.
After an impressive run to a new all-time high on Dec.1, Bitcoin (BTC) price appears to have entered a short consolidation phase as the price ranges between $18,200 and $19,500.
The 1 and 4-hour charts show the price compressing into a pennant-like structure and break out from the pattern would likely see the price move to the $19,400 level where is a bit more resistance.
A breakthrough the pennant would also suggest that the $19,000 level could now function as solid support and if bulls are able to flip the $19,400 to $19,500 zone to support then an attempt at overtaking the new all-time high is expected.
As many analysts have pointed out, periods of consolidation and pullbacks to retest underlying support are critically important to sustaining the strength of an uptrend.
Furthermore, if Bitcoin is truly is in a bull market, investors will view major and minor pullbacks as purchasing opportunities. Clear evidence of this can be seen in the daily chart which shows traders buying into every significant dip since mid-October.
We can also see that the pattern of daily higher lows is intact even after the most recent strong rejections at the $19,000 level.
If Bitcoin price fails to push through $19,200 or loses the $19,000 level, the volume profile visible range (VPVR) shows there’s support at $18,650 and below this at $17,800. $17,800 is also aligned with the 20-day moving average, a metric that has been respected since the uptrend first began on Oct. 7 when Bitcoin price traded for $10,600.
According to Cointelegraph contributor Micheal van de Poppe:
“It’s quite difficult to make any analysis at this point but the higher timeframes indicate that there is some overextension at this point. If Bitcoin does not break or close above $19K, I think we are going to reverse.”
Van de Poppe also suggested that one the weekly timeframe the crucial area to hold is $19,000 and on the daily timeframe. He cautioned that a potential bearish divergence could be hinting that a reversal in the shorter term.
What if bears take control?
In the event that Bitcoin price takes a bearish turn by dropping from the current range and losing the $17,800 support at the 20-MA, a retest of the 23.6% Fibonacci retracement at $16,100 is possible.
The VPVR on the daily timeframe also shows interest around $15,700, but as mentioned earlier, the price has respected the 20-MA since early October.
It’s also clear that retail and institutional investors have demonstrated a strong interest in buying significant dips so it seems unlikely that this trend will end even if BTC loses the current range.
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Source: Cointelegraph https://cointelegraph.com/