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Bitcoin Price Charts Offer Glimmer of Hope to Struggling Bulls
The slow drip bitcoin price sell-off seen over the last six weeks has produced a bullish pattern on the daily chart.
View
- Bitcoin has charted a falling wedge pattern on the daily chart. A break above $3,450 would confirm a wedge breakout and expose key resistance lined up at $3,658 (the high of the gravestone doji candle created on Jan. 26). A violation there would expose the psychological resistance of $4,000.
- The prospects of a falling wedge breakout would weaken if the cryptocurrency suffers a channel breakdown on the 4-hour chart.
The slow drip bitcoin (BTC) price sell-off seen over the last six weeks has produced a bullish pattern on the daily chart.
The leading cryptocurrency by market value is currently down more than 20 percent from highs above $4,200 seen on Dec. 24. The pullback may have reinforced the primary bearish trend, as represented by the long-term moving average studies.
STORY CONTINUES BELOW
Still, all is not lost for the bulls, as the lower highs and lower lows created over the last six weeks have converged, creating a downward sloping cone or a falling wedge on the daily chart.
The falling wedge is a bullish reversal pattern, that is, the price will often break above the upper edge of the pattern and rally. A breakout, if confirmed, could open the doors for a strong corrective move.
As of writing, BTC is trading at $3,400 on Bitstamp, representing a 0.66 percent drop on the day. The falling wedge resistance is seen at $3,450.
Daily and 4-hour chart
BTC is trapped in a falling wedge – a bullish reversal setup – on the daily chart. Meanwhile, the cryptocurrency has created a minor rising channel inside the wedge, as seen in the 4-hour chart.
The prospects of BTC confirming a falling wedge breakout above $3,450 would drop if the current 4-hour candle closes below the rising channel support of $3,410. That would open up downside towards $3,314 (200-week moving average).
A wedge breakout, if confirmed, would allow a rally toward $3,658 - the high of the bearish gravestone doji candle created on Jan. 26.
Weekly chart
On the weekly chart, the 5- and 10-candle MAs are trending south indicating a bearish setup. The falling volume bars, however, signal bearish exhaustion. BTC, therefore, could witness a falling wedge breakout, despite the bearish primary trend.
Disclosure: The author holds no cryptocurrency at the time of writing.
Bitcoin image via CoinDesk archives; charts by Trading View
Omkar Godbole
Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team based in Mumbai, holds a masters degree in Finance and a Chartered Market Technician (CMT) member. Omkar previously worked at FXStreet, writing research on currency markets and as fundamental analyst at currency and commodities desk at Mumbai-based brokerage houses. Omkar holds small amounts of bitcoin, ether, BitTorrent, tron and dot.
