Bitcoin Price Key Highlights
- Bitcoin price seems to be off to a slow start for the year as price is consolidating.
- It has formed lower highs and found support around $12,500, creating a descending triangle pattern.
- This is also around the right shoulder of the head and shoulders reversal signal highlighted in an earlier article.
Bitcoin price is now consolidating inside a descending triangle pattern, waiting to establish direction at the start of the year.
Technical Indicators Signal
The 100 SMA is still above the longer-term 200 SMA on the 4-hour time frame, so the path of least resistance is to the upside. This signals that the rally could still resume.
However, the gap between the moving averages is narrowing to indicate a likely downward crossover. In that case, bearish momentum could return and make a downside breakout possible.
The triangle is around $700 tall, so the resulting breakout could be of the same height. The moving averages are close to the top of the triangle, adding an extra layer of resistance in case bulls try to push bitcoin price higher.
Stochastic is on the way down, which means that sellers still have the upper hand. However, an upward crossover has formed so the oscillator could resume its climb at some point. RSI is also heading higher so bitcoin price might follow suit.
Market Factors
The odds are looking slightly positive for the dollar at the turn of the year as the tax reform package has been passed and traders are looking forward to more Fed rate hikes this year.
On the flip side, bitcoin price has been unable to sustain the climb beyond the $20,000 handle as profit-taking towards the end of the year took hold and enthusiasm after the bitcoin futures launch on CBOE and CME faded.
Reports that South Korea is also moving to curb bitcoin transactions has also been negative for this cryptocurrency as the Asian nation accounts for a huge chunk of overall market activity.