Bitcoin's recent forays into price territory above $4,000 have been beaten back over the holiday, putting the bulls under pressure to regain momentum.
The cryptocurrency had peaked to around $4,140 on Dec. 21, then to over $4,200 on Dec. 24, but dropped sharply back to around $3,720 early yesterday. A small bullish bounce since has now subsided and, at press time, bitcoin is changing hands at $3,762, as per CoinDesk data.
The world’s largest cryptocurrency by market capitalization now looks to be consolidating under a lower low, potentially building momentum for another push above $4,000 should buy pressure persist above two key resistance levels.
In our previous article, we discussed a possible visitation to resistance (R2 on chart) at $4,400, based on the measured Fibonacci extension taken on the daily chart. Bitcoin barely peaked out at $4,236 (R1), however, before it was rejected to lows not seen since Dec. 20, resulting in the formation of the temporary support.
Currently, it would appear that bitcoin doesn’t have the capacity to climb higher, as volume is falling with rising prices on the smaller time frames (1-hour chart, 30-min chart).
Pressure is now mounting for the bulls to make a play above $4,200 or risk conceding the short-term up-trend they had struggled hard to win.
The bears will now be hoping to force prices down past the temporary support line and to close below $3,650.
The 2-hour volume bars are varied as price action continues to subside from the Dec. 24/25 sell-off, implying reactions are mixed and traders may begin to grow anxious at these levels. If so, another move down is most likely.
- A short-term sell-off showed bitcoin’s temporary support lay at around $3,675 with a small bullish bounce triggered from that zone.
- Bitcoin was rejected from around $4,200 on Dec. 24/25, signalling bullish exhaustion.
- A drop below $3,650 would dash short/mid-term bullish hopes heading into the new year.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; charts by Trading View
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