Bitcoin Analysis for 2019-12-18 [Premium Analysis]

Bitcoin Price Highlights

• The Bitcoin price has retraced fully to November 25 levels.
• It is trading very close to the support line of its descending channel.
• There is significant bullish divergence in the RSI.
• The weekly outlook is bearish.

Full Retracement

The Bitcoin price decreased significantly yesterday and broke down from its descending wedge. At the time of writing, it was trading slightly above $6600. It has retraced fully relative to its November 25 levels, seemingly creating a double bottom.

Descending Channel

The Bitcoin price has been trading inside a descending channel since June. When it reached the support line on November 25, it created a long lower wick and completed a bullish close. We can see that the RSI has created bullish divergence. However, the current RSI is above the divergence trendline. A decrease to the support line of the channel would validate the trendline of the divergence, making this scenario highly likely. The same divergence is present in lower time-frames between the November 25 and current bottom. Combined with the buying pressure visible from the lower wick, this makes us think that a bounce should occur at these levels. However, it will likely end near $7100-$7200, the previous breakdown level, then the price should continue decreasing towards the support line.

Weekly Bitcoin Outlook

Looking at the weekly chart, the current week’s bearish engulfing candlestick has been dissolving the previous support. The weekly close has tremendous importance for the future of the Bitcoin price. Since there are five more days left for the close, we could see the price decreasing to validate the support line, before moving upward and creating a long lower wick. This would created a strong double bottom relative to the week of November 25 and cause the price to make another attempt at moving above the resistance area at $7600-$7800. A breakdown from the channel would take the price to $5500, the 0.786 Fib level, and previous support. Currently, this seems unlikely. To conclude, the Bitcoin price should see an upward bounce soon. The weekly close will go a long way in determining the future prospects of the price. Good luck and happy trading! For our previous analysis, click here.