The highly volatile digital currency seems to have gone into a hibernation mode, barely moving in the past one week. As mentioned inyesterday’s analysis, the bulls are finding it tough to pose serious threats to the shorts as Bitcoin still lingers around $290.
Technical analysis on the 240-minute BTC/USD price chart reveals that the consolidation period may extend for a while.
Moving Average Convergence Divergence – The Signal Line is slowing catching up with the MACD and as a result, the Histogram value is retracting to 0. A declining Histogram value indicates that the bulls are losing momentum and the cryptocurrency may see a correction going forward.
Relative Strength Index – The RSI value is heading back to the neutral level of 50. The fact that the RSI has dropped from 60 to 54 in the past 24 hours speaks of the rapidly declining bullish intensity.
Momentum – The Momentum indicator reading of 4.17 inspires as much faith in the bulls as the MACD and the RSI. The Momentum reading has also corrected from 8 to roughly half its value in the last 24 hours. A dip in the negative territory should be viewed as bulls losing their ground.
Price Chart – As can be seen from the chart above, Bitcoin is trapped between the horizontal Support Line 1 and the upward sloping resistance. A breakout in either direction would bring the much-needed action back into the cryptocurrency.
In the end, traders and speculators would be advised not to initiate any trade until the price reaches either of the extremes. This consideration would reduce the risk inherent in the digital currency and lead to better returns. A move towards the support line should be used to add long positions while that to the resistance for creating short positions.