- The current daily candle is a bearish engulfing candle.
- Daily indicators are bearish
- Price has made three unsuccessful attempts to break above the 7-day moving average.
The price is trading in a short-term descending wedge and got rejected by the resistance line for the 4th time, sparking a sharp drop on very significant volume from $3520 to $3440 in less than two hours. All the data and charts are taken from the BTC/USD pair on BITFINEX.
Bitcoin Price Analysis – BTC/USD Daily Chart
A look at the Daily chart shows that the price of BTC has retraced all the way to the 0.786 fib line of the entire upward move ($3273 to 4175). A break below this area would put in action the minor fib support area near $3361 and then the most significant support area at $3240-$3320 which would effectively make a double bottom pattern. Price has made three unsuccessful attempts at breaking through the 7-period moving average which has made a bearish cross. Furthermore, the price is currently trading below all the moving averages and the Ichimoku Cloud, portraying a bearish scenario. The retracement started after the double top on January 7th and is currently on day 30.
As for the indicators, after making a bullish cross 5 days earlier, the MACD has lost all of its power and is currently on the process of making a bearish cross. There is no significant divergence of any kind in the RSI.
A look at the 2-hour chart gives us a structure in which price is trading in. Price is trading in a descending wedge and has been doing so for the past 18 days and 2 hours. It got rejected four times by the resistance line and the 2-hour bearish candle which started on 01:00 closed with very significant volume (yellow arrow).
Furthermore, the price made multiple unsuccessful attempts to break past the resistance offered by the 200-period moving average which coincided with the wedge resistance and has now fallen considerably below it. Also, the 7 and 21 period MAs have made a bearish cross and are both dropping sharply. Similarly to the daily analysis, the price is trading below all the moving averages, a bearish sign. The wedge is projected to end near February 16th.
- The closest support area is found at $3240-$3320.
- The closest resistance area is found at $3610-$3670.
- Price is trading in a descending wedge.
Valdrin is an eager trader, cryptocurrency enthusiast, and freelance writer. He specializes in technical analysis, indicators and charting guides. Reach out to him at [email protected]