Mid-December Bitcoin shrugged off the yearly low with a strong bounce and quickly tested the previous support now resistance line (Pink line), which has been in place since 2015. Since that time Bitcoin has been trending lower and lower in what can be seen as a falling wedge. Through January 13th the RSI indicator for Bitcoin continued to show increasing bearish posture. On that day we see a correlating low with the RSI and a dump to $3375 for btc. Since then the price has continued downward but of interest is almost two weeks later on January 29th the RSI brought us a higher low. Given this time-frame from January 13's RSI low and the RSI low on January 29 we can see that with the price action continuing downward and the RSI producing these higher lows that bitcoin is showing signs of a bullish divergence. Additionally, the price action in a tightening range within a falling wedge is a positive note.
Though there is still potential for a new low, later on, in the mean time it seems likely that Bitcoin is ready to buck the trend and breakout to test higher resistance levels. One of the hardest levels of resistance, and the likely place that Bitcoin is to face rejection is against the long-term support now resistance line at the price target of $4950. From this resistance point it stands to reason that Bitcoin could see a new low and finally capitulation, but that is just speculation and we will have to see how it plays out as Bitcoin makes its move.
As of this time I see the R/R in favor of the bulls and opening a long position as the likeliest of making profit. Shorting at this level would be foolhardy, at best, without a clear break under $3000.
Though there is still potential for a new low, later on, in the mean time it seems likely that Bitcoin is ready to buck the trend and breakout to test higher resistance levels. One of the hardest levels of resistance, and the likely place that Bitcoin is to face rejection is against the long-term support now resistance line at the price target of $4950. From this resistance point it stands to reason that Bitcoin could see a new low and finally capitulation, but that is just speculation and we will have to see how it plays out as Bitcoin makes its move.
As of this time I see the R/R in favor of the bulls and opening a long position as the likeliest of making profit. Shorting at this level would be foolhardy, at best, without a clear break under $3000.