Technical analysis of BTCUSD

Bitcoin has mostly held on to recent gains so far this week although price has declined somewhat from the peak over $12,000. Inflows of liquidity from central banks around the world appear to be affecting crypto markets now as well as shares and gold. Record low interest rates across the globe and the proliferation of legitimate crypto invest schemes in 2020 so far have continued to drive demand for bitcoin. Today’s technical analysis of BTCUSD looks at areas on the four-hour chart.

High resistance could be last summer’s high around $13,750, which is somewhat above the top of this chart. Before this might be tested, though, the latest high of $12,000 is likely to be an important barrier to upward movement. Low support on this timeframe could be the key psychological area of $10,000. Before this is tested, though, moving averages will probably cap any retracement unless sentiment suddenly takes a sour turn.

Technical indicators on BTCUSD H4

Moving averages continue to give a strong buy signal, with each of the 50 (from Bands), 100 and 200 SMAs successively above slower ones and below the price. The space between the 100 and 200 SMAs has grown slightly this week. Based on price action in general since Monday morning GMT, the 50 SMA seems to be a crucial area of support in the short term. Several attempts to push below this line were rejected.

The slow stochastic (15, 5, 5) at around 86 remains clearly within the overbought zone with a downward crossover in progress. However, Bollinger Bands (50, 0, 2) do not currently give an overbought signal; Bands have contracted quite sharply recently, suggesting lower volatility over the periods to come. It’s possible that this might signal an extended period of consolidation around the current area.

Price action and Fibonacci

The large downward engulfing candle at the very beginning of the week came with an unusually long tail as price tested support around the 50 SMA. With $12,000 now seemingly established as a resistance, traders will be monitoring price action in this area especially closely. The three soldiers yesterday morning GMT might well indicate more gains in the future, but we can reasonably expect these to be limited and with weaker momentum given the context of overbought from the stochastic and the shrunken Bands.

The 50% area of the daily Fibonacci fan (based on recovery from the crash in March to the first test of $10,000) has also capped gains recently around $12,000. In the event of an extended consolidation, this area will probably be in focus if price can break through 12k. To the downside, the 61.8% area of the same fan is likely to strengthen the zone around $10,000 as a support if there’s a fairly deep retracement over the next few weeks.