Never a boring day in crypto: decision-time for bitcoin is here. Again! After the $4K resistance got the better of it, bitcoin broke the diagonal support and gradually collapsed down to $3500. As this happened, the RSI uptrend (intact since mid-December) on the daily chart was also breached.
The inverse H&S pattern obviously failed to materialize. The chart pattern we’re looking at now is the descending channel and this means serious downside potential. A convincing bounce is badly needed very soon, with the altcoin market needing it even more than bitcoin.
Decision-time for bitcoin, daily time-frame
$3,400 is the place where a bounce is a must to prevent further carnage. There is confluence between the bounce area and the daily RSI. Aside from the mid-December drama, the RSI support line was respected throughout the 2018.
It is possible that the same line will mark the new sideways support in 2019, thus probably meaning that the bottom is more or less in. In other words, the $3,400 – $3,500 area is a pretty sweet spot for a long. However, in case RSI breaks below level 35, new lows and a even more thorough purging of the altcoin market are to be expected.
MACD Bullish divergence spotted
Nothing is ever easy. With a bullish divergence forming according to MACD, it is quite possible that BTC will shoot upwards before entering the real demand zone (buy volume is still low).
However, there is strong resistance above. In case I miss an entry with a descent risk-reward ratio (entry at around $3,450, with a stop-loss around the RSI breakdown in the $3,350 ish area), I’ll be opening shorts at around $3,750.
As you can see, the altcoin marketcap is currently in some sort of an upside channel. However, that upside channel is but a smaller pattern inside the much bigger pattern – the falling wedge pattern.
In case BTC breaks below $3,400, I figure there is an extremely dark immediate future for most of alts. The potential loss would be much greater than that of BTC. Thus, exiting your alt positions in time is highly advised in case BTC goes to test the double-bottom pattern.
On a final note
While waiting for some sort of a direction to present itself you may just as well read this very nice analysis called The State of Bitcoin: Long-Term Value Potential & Analysis. To sum it up, there is light at the end of the tunnel (and it’s probably not another train). The real decision-time for bitcoin is the coming decade – and it looks pretty good.