Over the past few days, Bitcoin has finally stabilized after the strong price crash seen on Sunday through Wednesday that took BTC from $10,000 to $8,400. While some analysts fear that this consolidation is a precursor to another leg lower, referencing the fact that assets never trend in a straight line, there’s a case building that this is consolidation is indicative of a bottom.
Analysts have explained a number of technical reasons why they think is the case. Here are some of those reasons compiled by Ethereum World News.
Bitcoin Could Be Bottoming, 4 Technical Trends Suggest
Firstly, Bitcoin’s 12-hour chart has purportedly started to print bullish divergences between the price and indicators like the Relative Strength Index (RSI). Bullish divergences — when the price of an asset trends lower as an indicator ticks higher — often resolve upwards, with the asset’s price catching up with the indicators in question.
Although some doubt the accuracy of bullish divergences in a bear trend, analyst RookieXBT claims that there are divergences being printed on the 12-hour chart, which holds more weight than, say, Bitcoin’s four-hour chart.
Keep shorting bull divs up to the 12h, while we’re at HTF support after price is down ~20% in a bit over a week from recent highs
Odds are definitely in your favour
With that being said, it’s POSSIBLE that we go down – but at this very moment, I don’t think it’s LIKELY
— RookieXBT (@RookieXBT) March 1, 2020
Secondly, BTC is currently trading at high-time frame support around $8,500, which is slightly below a number of key levels: a Point of Control as defined by the market profile, the 200-day exponential moving average, the 20-week moving average, the 50-week moving average, and many other levels deemed relevant by textbook technical analysis.
The fact that cryptocurrency has held up well around these levels, quickly being bought up every time it falls under $8,500, suggests to some that Bitcoin has an underlying bid that will eventually resolve in a thrust to the upside.
And lastly, analyst Sawcruhteez remarked that the 30-minute Bitcoin chart of the price action over the past five days is “starting to show some striking similarities to what we saw on the four-hour chart in December.”
For those who missed the memo, the price action in December saw Bitcoin bottom in a way depicted in the studies of technical analysis legend Richard Wyckoff (the aforementioned Wyckoff Spring).
— Financial Survivalism (@Sawcruhteez) February 29, 2020
What Sawcruhteez is suggesting is that BTC has over the past few days printed a price pattern similar to that seen in December, meaning that there’s a likelihood Bitcoin is bottoming and may soon explode higher past $9,000.
Photo by Pascal Debrunner on Unsplash