After completing its head and shoulders pattern earlier this week, bitcoin price has spent the last few trading hours consolidating. Does this signal a reversal or continuation on BTCUSD?
Bullish Bias on the Daily Chart on BTCUSD
On the daily time frame, we can see a couple of reversal candlesticks: a hammer and a spinning top. They could mean that there may be buyers where bitcoin price is currently trading at 7,934.50. If this turns out to be the case, BTCUSD could trade higher to test the confluence of resistance around 8,616.70. For one, the 100 SMA and 200 SMA seem to coincide at this price. It also aligns with the neckline of the head and shoulders pattern. Lastly, the 61.8% Fib level also falls at this price when you draw the Fibonacci retracement tool from the high of March 7 to the low of March 9. If there are enough buyers in the market, we could even see a break of this resistance. The next ceiling would then be the highs for March 6 at 9,170.00.
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H4 Suggests More Downside Ahead
On the 4-hour chart, we can see a more bearish setup on bitcoin price. Because the consolidation happens after a sharp drop, it’s possible for us to see a bearish flag in the making. That is, if resistance at 8,150.00 holds. A break below the recent low at 7,630.00 could trigger a sell-off to the lows of December 17, 2019 at 6,600.00.
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