Technical analysis of BTCUSD
Bitcoin started the new year by reaching yet another all-time high of $34,761 as the uptrend from the previous quarter continued. Record low interest rates, the prospect of high inflation, increasing knowledge and participation in crypto interest schemes plus the somewhat lukewarm performance of various major shares in Q4 2020 have all contributed to the leading cryptocurrency’s strong gains. Today’s technical analysis of BTCUSD looks at the four-hour chart plus deliverable volume and futures.
The most obvious resistance here is the latest record high. Low support is less clear: it might occur around $22,000, the lower area of mid December’s consolidation. However, areas from moving averages and Fibonacci are likely to be more important in the immediate future.
Technical indicators on BTCUSD H4
Moving averages continue to give a strong buy signal, with each of the 50, 100 and 200 SMAs successively above slower lines and below the price. The first support from moving averages is the 50 SMA from Bands which is currently around $29,600. A powerful short-term bounce was observed from the line from around 9.00 GMT yesterday.
There is no longer an overbought signal from either Bollinger Bands (50, 0, 2) or the slow stochastic (15, 5, 5), the latter at 49.50 being almost exactly neutral. This situation in the context of a consolidation would often be considered as a good place to buy in for new entrants; however, higher timeframes must still be consulted.
Price action and Fibonacci
Price action in 2021 so far is consistent with a consolidation from an all-time high. While there have been larger downward bodies so far this week, the long tail around the 50 SMA suggests that demand to buy remains high. The next possible interaction with this line is likely to be key for determining the length and extent of the current consolidation.
The 161.8% weekly Fibonacci extension area capped the latest round of gains as expected, although very high momentum meant that this area was tested notably sooner than projected. The upcoming confluence of the 100 SMA with the 100% Fibo extension might establish c.$27,800 as an important zone of support in the event of a breakthrough downward from the 50 SMA.
The chart above demonstrates the usual situation for bitcoin of buying into strength; this has arisen over the last 30 days more than usual primarily because there has been no significant pause of the trend until this week. The very high volume this week so far – over $7 billion – might be interpreted as profit-taking among some traders, but it’s reasonable to adumbrate that many others are buying in here during the consolidation.
Futures on bitcoin
ICE’s futures on bitcoin reflect a basically similar situation to the spot CFD on bitcoin-dollar; however, there is no sign of a consolidation here. If anything, momentum upward has actually increased amid relatively high volume of 821. The contango over the next two months of about 3% is a fairly normal occurrence within an ongoing uptrend but volume for February and March’s contracts remains very low.
Technical analysis of BTCUSD: summary
Overall the technical picture for bitcoin is very positive, with more gains looking likely after the current phase of consolidation is over. The main question now is how deep price might retrace from the latest high and how long it might take for the uptrend to resume. Equally, though, the general unpredictability of crypto markets might make entering lower a sensible choice for those who do choose to buy.
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