Since bitcoin broke out of its five-month price range, we have seen it move sideways in a triangle shape, just below the $17,000 resistance area. There is a good chance that we will see an outbreak this weekend, but in which direction?
The bitcoin price is currently at 16,639.12USD. Only after an upward breakout from the triangle and the breaking of resistance around $17,000 do we get a first cautious reason to look further up.
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Bitcoin (BTC) daily chart
Has anything changed in recent days when we look at the daily chart below? The answer is no, nothing has changed.
In the previous update, we discussed that we will not oppose the downside breakout from the five-month price range. The main reason is that every time bitcoin forms a price range, varying in length from one to five months, there is always a significant expansion in the direction of the outbreak after a breakout.
The graph below clearly shows that every time bitcoin manages to break out of a price range that lasts for months, there is at least an expansion of 30% to 70% in the same direction as the breakout.
The recent downside breakout from the five-month price range has only resulted in a -16% drop to date. Given the foregoing, how realistic is it to assume at this point that bitcoin is forming a bottom?
How strong are arguments like: we see bullish divergence on the hourly chart so a bounce is imminent or the RSI is really heavily oversold, this must be the bottom, right?
The daily chart shows us very clearly which direction we are going and this is still the bottom right corner. This has been the trend since last November, so for over a full year. So here we are today and we’re still continuing our way towards the lower right corner, so nothing has changed at all!
We’re zooming in on the lower time frames to see if we’re already seeing some changes here and to further adjust our expectations. What are the important price levels for the coming days?
Bitcoin (BTC) 1 hour chart
We can see on the hourly chart that bitcoin is forming a consolidation triangle and is likely to break out sometime this weekend. Now that the trend before forming the triangle was bearish, the probability of a downside breakout is greater than an upside breakout.
In the event of a downside breakout, we will keep an eye on the price level around $15,800. On an upward breakout, we get a first tentative sign of strength. Finally, this scenario will see us move above the 200 MAs again and above the resistance area around $17,000. The chance of a further increase towards the former range low of $18,600 is not inconceivable in this case.
Bitcoin (BTC) 15-minute chart
The sideways price action of the past week is very well reflected on the 15-minute chart below. We continue to fluctuate around the 200 MAs without a trend, so without a clear direction.
We are facing a resistance area around $17,000, which is also confirmed by the volume profile. If we manage to break above this resistance area, i.e. an upward breakout from the triangle as discussed on the hourly chart, the chances of a further rise towards $18,600 are much more likely.
Until then, there really is no reason to be bullish, after all, all time frames from the weekly chart to the 15-minute chart are unanimously showing a clear bearish picture.
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