Bitcoin price found support last week just above 216 and started to consolidate. In the 1H chart, we can see that the cryptocurrency rallied to above 230 before starting to make lower highs and higher lows, forming a triangle.
The 1H chart shows the coiling bitcoin price action as well as the RSI. Price and the 200-, 100-, and 50-hour simple moving averages (SMAs) are all merging together around 223-225. Essentially, there is a volatility squeeze and bitcoin price is approaching the apex.
There is a theory that there are many types of cycles, volatility being one of them. With this short-term volatility squeeze since last week, we are likely going to see a breakout this week.
However, don’t jump to conclusion based on the initial breakout. Even if volatility remains steady, bitcoin will eventually breakout of the projected triangle. This won’t mean anything. A break above 230 or below 216 would be needed to indicate direction, and if it happens with a return of volatility, we should anticipate some extension of the breakout.
The 4H chart favors a bearish breakout:
In the 4H chart price is still under the 200-, 100-, and 50-period SMAs, which are sloping down and in bearish alignment. Meanwhile, the RSI is still below 60 after rebounding from under 30, even 20. This shows maintenance of the prevailing bearish momentum. The pressure is there fore still towards 216. Below that, there might still be support around 200-210, 210 being a previous support pivot in February. Below 200, bitcoin opens up the 166-167 low on the year.
If price breaks above 230, we should the bullish outlook first to the 245 level, where the 200-period SMA resides. We should probably expect resistance even earlier, around the previous resistance pivot at 240.
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