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Bitcoin Analysis: Awaits bearish reversal confirmation

Omkar Godbole FXStreet Contributor

The bearish divergence on the intraday charts stalled the rally in Bitcoin [BTC] on Tuesday. Prices fell to $3802 before trimming a major part of the losses to end the day with moderate losses at $4175. Currently, the virtual currency is trading around $3980. The upward sloping 5-DMA level of $3956 levels is offering support to the currency.

As per coinmarketcap.com, BTC lost about 7.7% over the last 24 hours. Its rival…Bitcoin Cash [BCC] has lost 2.6% and was last seen trading around $292 levels. Ether is down 2.2% at $286 levels. The total market capitalization of the crypto currencies currently stands at $133 billion.

Technicals

Resistance

$4100 [falling trend line]

$4166 [1-hour 50-MA]

$4424 [record high]

Support

$3896 [1-hour 100-MA]

$3802 [support on 1-hour]

$3700 [upward sloping 10-DMA]

$3563 [4-hour 50-MA]

Daily chart

Spinning top candle on Tuesday
Overbought 14-day RSI

4-hour chart

Rising trend line support intact
RSI at trend line support

1-hour chart

Lower highs established - falling trend line
Bearish RSI divergence and falling tops on RSI

View

Tuesday’s spinning top like candle signals the stellar rally appears to have run out of steam.

The bullish reversal would be confirmed if-

Rising trend line support on the 4-hour chart is breached and the RSI takes out trend line support.
And more importantly, a weak end of the day close, preferably below $3802 would open doors for a bigger pull back to $3500 levels.
Moreover, a break below $3802 would establish falling channel/lower highs, lower lows on the 1-hour chart.

On the higher side-

An Intraday break above the falling trend line hurdle of $4100 would open up upside for a re-test of the record highs around $4420 levels.

Only an end of the day close above the record highs would signal continuation of the record rally.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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