We will start this TA with the daily chart. The first thing to pay attention to is the green line trend line that can be followed back to April of 2019. We saw a second form of support with this level in October of 2019 around $7600 before spiking hard to retest the red line.
That resistance held and price broke down in November for an important retest of the lows at $6800. Price consolidated at these levels and eventually recovered back to the rising wedge after successfully retesting the green line in January 2020.
Price is currently located back at the red trendline, which has confluence with the 0.382 Fibonacci extension level. This level was obtained by running the extension from the lows of February 2019 to the highs in July 2019 and the subsequent retracements in December 2019 and January 2020.
The Bitcoin price right now has reached a critical resistance but the RSI on the daily chart is making higher highs and entering a very bullish zone, which indicates there’s a higher probability that price can break out of this structure and into the next foreseeable trading range from around $10K to $12.2K, which is a range of about 20%.
It’s recommended that you look at my previous Bitcoin long term fibonacci chart which details all of these levels and helps put things into context.
So from here there are two possible scenarios that I see: One is price rejects the current levels at $10.2K in order to test the bottom of the current trading range. That would offer up a very short-term treating opportunity with a potential 8% gain If you went short from $10200 to $9500.
If we get a breakdown, price would most likely retest the green line which shows Confluence with significant horizontal resistance at $9500 (blue line). If the green line support doesn’t hold price could return back to $8800 or $6800 to retest prior lows.
The second scenario would be a clean breakout into the range of $10K to $12.2K at which point we would re-evaluate. There has been some bearish Divergence forming over the last three weeks but with RSI making new highs and breaking above the 70 Line, there’s a higher chance the price will continue to go up Rather than breakdown.
If we take a look at a higher time frame chart such as the 4-Day, we can see that RSI is approaching the 70 Line while also simultaneously reaching significant local resistance. Looking at the 4D chart, it’s completely reasonable to expect price to retest lows of the current range around the blue line at $9400. Iit would not be out of the ordinary to consolidate at this level before breaking higher.
Longer-term Traders are in a very good position right now as all high time frame charts are looking very bullish. If you look at a lower time frame such as the 6H chart, the market structure becomes more apparent and it certainly becomes reasonable for price to retest the $9400 range and bounce around between the green and red line before giving any true indication as to which way price will go.
As of now all momentum indicators are showing strong bullish bias, short term traders can expect heavily volatility over the next few weeks and should only be looking for buying opportunities, shorting is dangerous at this time.