BTCUSD: Bitcoin Testing a Make-or-Break Resistance
Bitcoin has had a very stellar opening to 2020, breaching the $10,000 mark once more. However, it continues to struggle to break the key resistance at 10,500. This area was tested several times in 2019, with the last attempt being on Oct 21. That failed attempt precipitated the massive drop down to the 6800 mark.
The recent recovery is beginning to create a lot of drama in the crypto space. The self-professed “Satoshi Nakamoto”, Craig Wright, has just put up a post on his website where he claims ownership of Bitcoin’s original codes, saying “as the sole creator of Bitcoin, I own full rights to the Bitcoin registry.”
Wright is now threatening to sue Bitcoin Cash and Corecoin (BTC). Those who were professing the “$100,000 Bitcoin” price seem to have started emerging from their hibernation nests. Self-professed gurus have appeared online in numbers. Perhaps, the pre-2018 pump is back again. But what do the charts say?
How did Bitcoin get to where it is now? A look at the chart below shows the price evolution for the pair as it transcended resistance after resistance in a series of chart patterns that are every technical analyst’s dream.
Bitcoin saw its price activity of Jan 7 – 14 form an ascending triangle, which led to an uptick in prices. The bullish candle formed the pole of the eventual bullish flag formation that followed, and this pattern saw the attainment of further upside on the pair. A brief moment of consolidation was provided by the falling wedge, which eventually resolved with the further recovery of the pair that has taken Bitcoin to present levels.
However, the price remains capped at the 10,543 resistance level, and the presence of the bearish engulfing candle at that level will be a cause for concern for Bitcoin HODLers who are anxiously expecting the long-awaited “rise to the moon”. This area marks a make-or-break point for BTCUSD.
The technical pointers are starting to point to a pullback. RSI has been teetering on the oversold border for a while, and we have the bearish engulfing candle right on the resistance that has failed to give way since 2019 despite several tests.
Bitcoin continues to remain in a downtrend, according to what the monthly and weekly charts are saying. If price were to fall now, it would merely be a resumption of the downtrend, and this could retest the resistance-turned-support areas at 9588, 9000 and 8800, in that order. BTCUSD could also position itself to range trade between these areas for a while.
But the flip side could see BTCUSD break 10,543 and we can see price push towards the 50% Fibonacci retracement from the Nov 2017 swing high to the Dec 2018 swing low at 11,341. Only when price breaks the 13286 price level (61.8% Fibonacci retracement) should we begin to consider that the recovery could be for real.
So stay guided and do not get sucked into anything by the “gurus”. Trade what the charts give you.