Bitcoin Analysis for 2019-12-27 [Premium Analysis]

Bitcoin Price Highlights

• The Bitcoin price broke out from a descending channel.
• It has possibly created a head and shoulders pattern.
• A breakdown from this pattern would take it to $6400.
• The price has failed to move above the previous breakdown level for the fifth time.

Previous Bitcoin Breakout

The Bitcoin price broke out from a descending channel yesterday. The breakout transpired with significant volume. Afterward, the BTC price returned to validate the previous resistance line. While the price has made a double bottom near $7200, combined with long lower wicks, there is no bullish divergence to suggest that the price will move upward. There is a minor support area near $7150.

Head and Shoulders

The Bitcoin price seems to be following a longer-term bearish pattern. It has likely created a head and shoulder pattern, with an ascending neckline. A breakdown from this pattern that travels its full height would likely take the price to $6700, inside a support area. This makes sense since there is a lack of support below $7000, due to the rapid rate of the previous price increase.

Longer-Term

Looking at this H&S in the daily time-frame, we can see the strong resistance above the current price, both in the form of previous resistance and current moving averages (MAs). Also, the possible three-day pattern outlined in yesterday’s analysis has been invalidated — since, instead of creating a bullish engulfing candlestick, the Bitcoin price created a doji with a long upper wick. The weekly outlook gives a similar view. The Bitcoin price has failed to move above the previous resistance level for the fifth time. Currently, it has fallen back below the 50- and 100-week MAs. The breakdown from the H&S would take it to the previous wick lows and near the descending support line. To conclude, the Bitcoin price has created a head and shoulders pattern. A breakdown from this pattern would take the price near $6400. Good luck and happy trading! For our previous analysis, click here.