Welcome to another edition of TA the easy way. Bitcoin has consolidated for a week or so now, and looks like it’s forming a head and shoulders pattern on the 4 hour. If this completes at $22300 or so, depending on which exchange you are on. Is it time for a retrace or is this the imminent next leg up?
In my opinion, we will see a breakout in the next 12 hours. It’s just a theory that when three MA lines converge in a higher timeframe chart, that it is a point of breakout. It is Xmas eve and many are at home with their families. Will there be much trading volume, perhaps not. This may make price easier to manipulate.
And if we look at the 4 hour chart, we can see the red 10 MA and the orange 20 MA approaching the yellow 50 MA. This is the point but will price break up – most likely, since we are already in a bullish trend.
The RSI on the 4 hour has bounced up and down around the mid 50 range and remained uncertain for three days now. The 50 MA is acting as support for the last 16 hours. If the breakout is to the downside – based on the head and shoulders being a bearish pattern – then the target is down at $20500. The 20 MA on the daily is at $20800 so anywhere between those two figures would be a target range.
Buying pressure is obviously still huge from the whale institutions, so my hops of a 30% dip are fading. Ultimately the lowest be can fall and still be in a bull market is the 20 weekly MA, which is at around $14600 now on Xmas eve. But that is climbing by the week, so could be at $15k by the time any retrace occurs, or even higher if more time plays out.
So the floor is constantly climbing with price. And there is no fixed floor as such for a bearish retrace of the fabled 40%. Besides that the Bitcoin Dominance in market cap has had quite a pump but now retraced back to the 10 MA on the 4 hour chart, below 70. Still this is high and climbing.
Overall this potential head and shoulders is taking some time to play out so we will have to wait and see if it will materialise. Wait for price to break below around $22500 with volume and then also show strength to the downside. It may even push back up and retest the previous support at $22500, which will then become resistance, causing the second dip, much further, to the target. We will see in the next 12 hours or so. Be ready for either scenario. Xmas may be a time for bitcoin Santa to bring us a gift. May the reindeer be bulls and pull the chariot to the moon.
January is known historically to be more bearish on average, so let’s be ready for a sell off and watch the bulls buy it up, furthering the so-called liquidity crisis of bitcoin on the exchanges. If we break to the upside, then the target is up the same length of the earlier flag pole, which would take us to around mid $27k, the day after Xmas.
Either way, may your gifts be bountiful over this season. Bitcoin never takes a holiday and the exchanges are operating 24/7. That is one advantage bitcoin has above the entire rest of the financial industry. Nevertheless, I am sure many will spending time on family or personal issues over this weekend. May the world e blessed and get some rest.
