Bitcoin Price Key Highlights
- Bitcoin price recently broke below a long-term consolidation pattern but is now stuck in a new one.
- Price is trading inside a symmetrical triangle and is approaching the peak of the formation, indicating that another breakout is imminent.
- Price could still test the top of the triangle around $375 and the 100 SMA, which might hold as resistance.
Bitcoin price is due for yet another breakout, and the technical indicators suggest that the path of least resistance is to the downside.
Technical Indicators Signals
The 100 SMA is below the longer-term 200 SMA, which suggests that the downtrend could carry on. RSI is on middle ground, though, so buyers and sellers might still be undecided.
Meanwhile, stochastic is on the move up but is nearing the overbought region. Once the oscillator turns down from that area, bearish momentum could pick up and pave the way for a downside break.
If that occurs, bitcoin price could fall to the bottom of the triangle around $350. Stronger selling pressure could take it down to the next long-term area of interest at $300. On the other hand, an upside break could bring bitcoin price to the top of the triangle around $420, with stronger bullish pressure lifting it all the way up to the longer-term resistance at $465.
The US dollar lost ground to most of its peers, including bitcoin, in recent trading sessions when economic data came in mostly weaker than expected and a Fed official admitted that inflation might stay low for much longer. The core PCE price index showed a flat reading instead of the estimated 0.1% uptick, confirming that price pressures are subdued.
Also, personal spending was flat in December even as personal income rose 0.3%, hinting that consumers would rather save instead of spending. This could be indicative of weaker consumer confidence, which might weigh on overall growth later on.
With that, the US dollar might be poised to give up more ground to bitcoin price in the coming days, supporting the case for an upside triangle breakout. Then again, with risk aversion in play, the safe-haven dollar could continue to gain bids.
Upcoming market events include the RBA statement and BOE statement, both of which might sound more dovish than usual. This could be enough to bring risk-off moves back on the table, as central banks have been acknowledging the external threats from China and falling oil prices.
Factors that could also affect sentiment include a potential OPEC meeting to discuss a cut in production, which might then revive risk-taking and allow higher-yielding assets like bitcoin price to advance.
Long candles closing above the resistance at $380 or below the triangle support at $370 could be enough to confirm a directional breakout, although a surge in volatility could make bitcoin price prone to a fake out during top-tier market events, which also include the US non-farm payrolls report due on Friday.
Intraday support level – $370
Intraday resistance level – $380
Technical Indicators Settings:
- 100 SMA and 200 SMA
- RSI (14)
- Stochastic (8, 3, 3)
Charts from Bitstamp, courtesy of TradingView