Bitcoin Price Technical Analysis for 25/01/2016 – Symmetrical Triangle Alert!

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Bitcoin Price Key Highlights

  • Bitcoin price has been tossing and turning on the short-term time frames, as risk sentiment keeps shifting.
  • On the longer-term chart such as the daily time frame, a consolidation pattern can be seen.
  • Bitcoin price formed higher lows and lower highs since November last year, creating a symmetrical triangle formation.

Bitcoin price just bounced off the bottom of its long-term symmetrical triangle on the daily time frame and might be due for a test of resistance.

Technical Indicators Signals

The 100 SMA held as a dynamic support area, as it lined up with the bottom of the triangle near the $360 level. This might be enough to keep losses in check for the near term, putting bitcoin price on track towards the top of the formation around the $440-450 levels.

However, stochastic seems to be pointing down, indicating that sellers could take control of bitcoin price action. The oscillator is on middle ground for now, reflecting indecision when it comes to direction.

RSI is on the move up, hinting that buyers are gaining traction and might be strong enough to push for a rally back to the top or even an upside breakout. Prior to this, the oscillator showed a shallow bullish divergence, as it made lower lows while price made higher lows.

Also, the 100 SMA is above the longer-term 200 SMA, which confirms that the path of least resistance is to the upside. The short-term SMA is moving farther away from the 200 SMA so bullish pressure might be building up.

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On the other hand, a strong break below the 100 SMA and triangle bottom could signal that a long-term downtrend is brewing. This could be confirmed by a candle closing below the $380 level.

Market Sentiment

Market events could play a big role in determining sentiment in the next few days since the FOMC is set to make its monetary policy decision. No actual policy changes are expected for now but traders are keen to find out if the US central bank has shifted to a less aggressive stance given the developments in the financial markets at the start of the year.

These include the selloff in Chinese equities that might weigh on emerging economies and global growth prospects and the slump in oil prices, although a bit of a rebound was seen in the past few days.

A shift to a more cautious stance could keep risk-taking in play, as investors might relax on hopes that low borrowing costs could keep company profitability afloat and diminish the odds of seeing a global recession. Meanwhile, strong words of confidence on the US economy’s prospects could be bullish for the US dollar and might lead investors away from higher-yielding assets, which might be negative for bitcoin price action.

Any strong breakout in either direction for bitcoin price could set the tone for its longer-term trends for the rest of the year so keep close tabs on this triangle formation.

Intraday support level – $400

Intraday resistance level – $440

Technical Indicators Settings:

  • 100 SMA and 200 SMA
  • RSI (14)
  • Stochastic (8, 3, 3)

Charts from Bitstamp, courtesy of TradingView

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