Bitcoin Price Drops Back Below $4K But Bull Outlook Still Intact

Omkar Godbole
Mar 22, 2019 at 11:10 UTC
Updated Mar 22, 2019 at 11:29 UTC
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  • Bitcoin failed to capitalize on a bull breakout above $4,040 yesterday, but the short-term outlook remains bullish as the higher-lows pattern is still intact.
  • A convincing break above the three-day chart resistance of $4,040 still looks likely and could be followed by a rally toward the recent high of $4,190.
  • The immediate outlook would turn bearish if prices find acceptance below $3,920 (previous day’s low). A bearish close, if confirmed, could yield a drop to $3,700–$3,658 (Feb. 27 low).

Bitcoin (BTC) has dropped back from levels over $4,000, but the short-term outlook will remain bullish as long as prices are holding above key support at $3,920.

The crypto market leader jumped to a 25-day high of $4,055 yesterday, having secured a bullish UTC close above the psychological hurdle of $4,000 on Wednesday, going by Bitstamp data. The breakout above the crucial three-day chart resistance of $4,040, however, was short-lived with prices falling back to a five-day low of $3,920 before closing the day at $3,974.

Notably, the negative price action engulfed the trading range seen in the previous four days, which is widely considered an early sign of bull exhaustion.

That said, the path of least resistance is still to the higher side, as the bounce from lows near $3,920 has left the bullish higher lows pattern intact along the trendline connecting the Feb. 8 and Mar.4 lows.

For the immediate outlook to turn bearish, the engulfing price action seen yesterday needs a strong follow through in the form of a convincing break below $3,920.

As of writing, BTC is trading at $3,980, representing a 1.28 percent drop on a 24-hour basis.

Daily chart

On the daily chart, BTC created a bearish outside reversal candle yesterday as trading began on an optimistic note but ended with pessimism.

A bullish-to-bearish trend change, however, would be confirmed only if prices close below $3,920 (low of the bearish candle) today. A move below $3,920 would confirm a downside break of the ascending trendline and shift risk in favor of a deeper drop toward the Feb. 27 low of $3,658.

On the higher side, a break above $4,055 would reinforce the short-term bullish setup and could fuel a rally toward the recent high of $4,190.

3-day chart

The odds of a rally toward $4,235 (inverse head-and-shoulders neckline) would strengthen if the current three-day candle closes (today) above $4,040, validating the bullish engulfing candle created in three days to March 16.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; charts by Trading View

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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.