Bitcoin Remains On Hunt For $4.2K Despite Price Consolidation

Omkar Godbole
Feb 22, 2019 at 11:30 UTC
Updated Feb 22, 2019 at 11:47 UTC
markets

View

  • Bitcoin’s low-volume price consolidation has taken the shape of a bull flag on the 4-hour chart. A break above $3,930 would confirm a flag breakout and open the doors to $4,330 (target as per the measured move method).
  • The flag breakout looks likely, as the longer duration charts are biased bullish: Monday’s high-volume triangle breakout is still valid, while a bullish crossover between the 5- and 10-day exponential moving averages (EMAs) on the 3-day chart indicates a positive shift in market sentiment.
  • Another failure to take out $4,000 could yield a pullback to the 100-day moving average, currently lined up at $3,782.

Bitcoin’s three-day price consolidation looks to be a bull breather before a continuation of the recent rally to above $4,000.

The leading cryptocurrency by market value is currently trading largely unchanged on the day at $3,920 on Bitstamp. Notably, prices are trapped in a narrowing price of $4,000 to $3,860 for the third consecutive day.

As a result, traders may feel tempted to question the reliability of the high-volume triangle breakout, confirmed on Monday. The bearish-to-bullish trend change, however, will remain valid as long as prices are held above $3,614, as discussed yesterday.

Trading volumes have dropped 43 percent from the nine-month high of $9.93 billion seen on Tuesday, according to CoinMarketCap. So, the pullback from highs near $4,000 to $3,900 is likely nothing more than temporary bullish exhaustion.

Further, BTC seems to have created a bull flag pattern – a pause which often refreshes on the higher side – on the technical charts. Therefore, the cryptocurrency could soon pick up a strong bid and rise above $4,000.

4-hour chart

A 4-hour close above the upper edge of the flag, currently at $3,930, would confirm a bull flag breakout and open the doors to $4,330 (target as per the measured move method).

The RSI, currently at 63, is again reporting bullish conditions, as opposed to overbought readings seen three days ago.

Major averages – 50, 100 and 200 – are also trending north indicating a bullish setup.

Daily chart

On the daily chart, BTC has bounced upwards at the ascending 5-day moving average (MA), reinforcing the bullish view put forward by the short-term MA studies.

A high-volume break above $4,000 would bolster the already bullish technical setup and allow a rally to December highs above $4,200.

A less-likely close below Monday’s low of $3,614 would abort the bullish view.

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

Bitcoin image via Shutterstock; charts by Trading View

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.


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.