Bitcoin price analysis shows BTC is struggling to go above $8,000 as bears continue to drive the price south inside a downtrending channel. At the time of writing, the largest cryptocurrency by market capital is up a marginal 0.44% against the US dollar as bullish sentiment begins to thin out.
Bitcoin Price Analysis: 4-Hour Chart
On the 4-Hour chart we can see that bitcoin price 00 is tracking faithfully inside a downtrending channel between two strong trend lines (white dashed lines).
Within this time frame, bulls have so far failed to successfully test the downtrending resistance on 3 occasions – with the asset making consecutively lower lows after each attempt. This shows that bearish traders are beginning to take back control of BTC/USD, and are subsequently forcing bullish traders to find support at increasingly lower levels.
Over the next few candles however, we should expect to see some pushback from BTC buyers as the price action retraces back to a strong uptrending support level (yellow line). This particular support has caught the lower lows twice for BTC and allowed bullish traders to launch new upside recoveries each time.
How bullish traders react at this critical moment will give us a good indication of the current market sentiment, and whether we are likely to see BTC rise back above $8,000, or continue grinding down.
Should the bears succeed in breaking the uptrending support, then it is more than likely that BTC will continue downtrending inside the channel until either the channel support or resistance is successfully tested.
Looking at the price action in closer detail over 30-minute candles, we can see some other interesting components of the downtrending channel.
By drawing a fibonacci channel between the two most recent highest highs, and extending it downward to the two lowest lows, we can see that there is also a strong interior s/r line at the 0.5 fibonacci level.
The 0.5 fibonacci level was a strong resistance for bitcoin particularly between May 19-20, but more recently it has turned into strong support for the asset.
Using this a signal line, we can assume that when the BTC price passes below this line, it is likely that it will continue downtrending towards the channel support below. When it passes above the 0.5 fibonacci level, then we can make the assumption that bullish momentum is growing and that BTC is likely to be headed towards the channel resistance above.
Right now we can see that BTC is performing in the upper part of the channel still, despite recently ricocheting off the resistance during the late hours of May 20. If it breaks below the 0.5 fibonacci ‘signal line’ however, then it is likely that bearish momentum will continue to drive BTC’s price down towards the support below.
Looking at the MACD indicator on the 30-Minute chart, we can see that the 12-MA is now starting to bearishly diverge with the 26-MA, along with selling volume increasing on the histogram. Bullish traders will need to work hard to re-establish the $8,000 level if BTC is to stand a chance of breaking out of the downtrending channel early.
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[Disclaimer: The views and opinions of the writer should not be misconstrued as financial advice.]
Images courtesy of Shutterstock, Tradingview.com
The post Bitcoin (BTC) Price Analysis: Downtrending Channel Keeps $8K Out of Reach appeared first on Bitcoinist.com.
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