Bitcoin spiked strongly in both directions over the past few hours as volatility ticked higher but failed to put price in a clear course. It is still trading within the symmetrical triangle consolidation previously highlighted but might be showing some upside.
The 100 SMA is below the longer-term 200 SMA, though, so the path of least resistance is to the downside. In other words, support is more likely to break than to hold. In that case, price could fall by the same height as the triangle, which spans $3,850 to around $4,050.
However, price is trading above the 100 SMA as an early indication of bullish momentum and might be poised to break past the 200 SMA dynamic resistance as well. Bitcoin appears to have closed above the triangle top but it could be too soon to see if this is not a fake out.
RSI is in the overbought zone and looks ready to move south to signal a pickup in selling pressure. There’s plenty of room for the oscillator to head lower before reaching the oversold region, which means that there’s plenty of time for sellers to stay in control.
Meanwhile, stochastic is just on the move up to show that bullish momentum is in play and could stay on until overbought conditions are seen. This oscillator has some ground to cover before indicating overbought conditions or exhaustion among sellers.
Technical indicators have been giving mixed signals and analysts have mixed forecasts as well. Tom Lee of Fundstrat maintains that bitcoin bulls will be back this year while others point to similarities between current price action and the 2018 bitcoin crash.
Factors that could lead to a bitcoin rally include the Bakkt platform and Fidelity’s institutional offering, but so far traders are still holding out for actual updates on how these are turning out. Any evidence of a surge in volumes could draw bulls back in, but there is still a lot of hesitation evident in the markets these days.
Others noted that bitcoin has been repeating its price action in November last year where bitcoin was stuck around the $6,400 mark before making a nearly non-stop slide to the $3,200 area.
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