Bitcoin Weekly Analysis: Key Highlights
- Bitcoin after trading close to the 250.00 resistance area failed to maintain gains, and is currently heading lower.
- It remains at a risk of a downside break, which might take it towards 230.00.
In one of the previous analyses we forecasted that Bitcoin might struggle to clear the 247.50-250.00 resistance area and could correct lower. It started a short-term correction, and also formed a descending channel on the 4-hours chart. Recently, the price dropped to the 76.4% fib retracement level of the last leg from the 227.50 low to 247.50 high. It also breached the channel support area, but later managed to close back inside it.
Role of Bollinger Bands
The highlighted channel is perfectly aligned with Bollinger bands, so it would be interesting to see how Bitcoin trades in the near term. It has moved silently below the middle band of Bollinger bands, suggesting that buyers are struggling to prevent losses. Moreover, the Bitcoin also settled below the 100 simple moving average (4H), which is a bearish sign. However, it is not convincing enough, and we need to see more downsides before we can conclude that prices are comfortably placed below the 100 SMA.
Another worrying sign for buyers is the fact that the 4H RSI has moved below the 50 level and there are currently no signs of a move back higher.
Intraday Support Level – 232.00
Intraday Resistance Level – 240.00
If the price moves higher from the current levels, then it might find resistance around the channel upper trend line. On the downside, Bollinger bands lower band i.e. coinciding with the channel support might act as a hurdle for sellers.
Overall, as long as the price is moving inside the channel it might continue to head lower in the short term.
Charts courtesy of Trading View