Last Bitcoin Push Holds, Sets Up Potential Double Bottom
The Bitcoin (BTC) bounce that came in on December 18 is still progressing nicely, despite some heavy selling yesterday into the bottom of the retracement range. Price is holding in such a way that exhibits the strong possibility of a successful double bottom, dangling the potential for a holiday reversal in front of us. Generally, Bitcoin has been in a downtrend since mid-2019.
We start with a 4-hour chart with Volume Profile indicator, and see that price has lately climbed above the densest area of recent trading, around $7,150. This level marks the center of the local structure, and marks the point of a potential high-timeframe reversal.
Moving to our more typical 4-hour chart, we see that the bullish structure of the latest series of surges is holding well. We’ve seen two pushes since the 18th, and although this latest one retraced extensively (see below), it has remained ultimately bullish.
We see that the RSI rose with price, which is positive, although volume fell on the respective surges which is certainly not positive. The RSI put in a lower low on the current retracement relative to the previous low, which may constitute a hidden bullish divergence and anticipate a continuation in the trend. Price has held the 55 EMA here quite consciously, suggesting some bullish commitment to a new uptrend; and the histogram has started to contract back bullish after completing the retracement.
Moving to the daily, we see what is really exciting about this Bitcoin move: the chance for a larger double bottom, which may end the 6-month-long downtrend. We see a clear bullish divergence on the RSI here, as well as continued histogram momentum to the upside. Price has lately retaken the 21 EMA and continues to hold it, and local range between the 55 and 21 is currently in play.
Volume is the question mark here, as it has not come in yet to put in a higher level on the surges. Price here is getting rejected within October’s support zone – now resistance – but if this area can be retaken, price could sail all the way up to $8,400 before finding new major resistance.
The seeds are here for a large and high-timeframe reversal. The present price action supports it, and if it keeps up, we may see it play out – but we must remember that it hasn’t happened quite yet, and the trend remains down until we start breaking $8,400 and retaking some of the major resistance levels above there.