Bitcoin’s (BTC) is developing nicely today after yesterday’s gains, with a bull flag so far holding its gains against attempted selling. With this against a larger backdrop of growing Bitcoin dominance, and the search for an end – or continuous – of a nearly six month downtrend, the potential for a larger double bottom currently exists on longer timeframes.
We start with the 4-hour for a general view of the local market. Yesterday’s gains are being held precisely at the limit of recent support, from late November; and also just above the EMAs. The 55 has held this price action throughout the last 24 hours. We can also see that the histogram is starting to contract and accelerate back up.
Although it could completely collapse, the potential clearly exists here for a continuation of yesterday’s price surge with another leg up. We might expect another leg to run at least until $7,650.
Coming in closer, to the hourly, we see probable strength above the area of most trading during mid-November, and above the 21 EMA. Volume has begun building again at time of writing, after trickling to nothing (Bitstamp), signalling another move likely soon.
The RSI trend seems to have reversed and has started putting in higher levels on the hourly. The histogram has also crossed back bullish on this timeframe. Finally, we see a bullish divergence on the yesterday’s histogram lows. Whatever ends up happening, this is a nice trade setup for a leg up.
Moving out to the daily, we see the larger movement down within a parallel channel. If this low holds, it constitutes a bullish divergence on the histogram. We see October support will form our first line of resistance on another surge, along with the 55 EMA at $7,770; and $8,500 being a likely top if price makes it through this region.
Alternatively, if yesterday’s surge proves to be a flash in the pan, we will ultimately hope for a final low at around $6,000, at the confluent level of the bottom of the channel, and the bottom of 2018’s main consolidation area. Anything beyond that would be seriously bearish.
Things look interesting today, and another leg up seems fairly likely. But as always, we must bear in mind the larger downtrend which is still very much in play – and “the trend is your friend.”
The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.
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