The bitcoin price on Wednesday jumped as high as 4.65 percent from its opening price and established an intraday high at $3,488.
The BTC/USD rate is now trading at 3440-fiat on the Coinbase exchange, coupled with a notable rise in daily volatility. The pair on December 7 established its yearly low at 3210-fiat, after which it consolidated within a circa $300 range. It established a top near 3650-fiat only to find itself pulled back strong bearish presence near the level. Historically, BTC/USD now is looking to retest the same top, providing it punctures through some parameters to its upside.
That said, according to the Coinbase chart above, the BTC/USD rate is already trending inside a falling wedge pattern, as also discussed in some of our previous analysis. As the pair breaks above the upper trendline, it would likely set its near-term upside targets towards the 200-period moving average depicted in red, while testing 3650-fiat as an intermediate resistance level. The technicalities attached with a falling wedge formation expects a breakout formation. So is bitcoin, after months of depressive price action, finally preparing for a breakout?
Then again, the bitcoin price has failed to post a convincing upside action lately, and one shouldn’t be surprised if BTC/USD reverses towards the south. We expect the bears to take over once the pair breaks below its 50-period moving average curve depicted in blue. At worst, BTC/USD would form a double bottom at 3210-fiat followed by another breakdown session towards a bottomless pit — or the lower trendline of the prevailing falling wedge formation.
On a daily chart, the RSI momentum indicator is still struggling to come out of its selling sentiment area, confirming the BTC/USD pair is far from establishing a full-fledged breakout. The Stochastic Oscillator, at the same time, is also inside an oversold territory.
The general scenario proves that bitcoin has a long way to go before bottoming out in reality. Spot investors are visibly scared to enter the market, and they are likely to remain the same unless BTC/USD establishes a concrete support.
For now, let’s wait for BTC/USD to undergo an interim breakout action, which should open decent long opportunities toward 3590-fiat as a potential interim upside target. Traders are recommended to keep their stop loss 1-pip below the entry position to maintain their risk management strategy.
Featured Image from Shutterstock. Charts from TradingView.
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