Bitcoin Analysis for 2020-01-03 [Premium Analysis]

Bitcoin Price Highlights

• The Bitcoin price broke down from a head and shoulders(H&S) pattern.
• The breakdown could not be sustained.
• The price created a bullish morning star pattern.
• The price has possibly created a longer-term inverse H&S pattern.

 

Failed Breakdown

The Bitcoin price created a head and shoulders pattern beginning on December 18. Yesterday, the price broke down from the pattern amidst a bearish engulfing candlestick with significant volume. The price quickly reached the minor support area at $6900. However, the lower price levels could not be sustained and BTC began an upward move that reclaimed the breakdown level — which had higher volume than the breakdown preceding it. Whenever the breakdown levels cannot be sustained, it often has bullish implications for the future price. Once the price reached the minor support, it created a morning star pattern, with a completely engulfing bullish candlestick that transpired with high volume. However, while the price reclaimed the breakdown levels, it failed to move above significant moving averages (MA), such as the 25-day MA. The daily outlook better reveals these levels. The daily candlestick, which has more than 12-hours to reach its close already contains yesterday’s bearish one. However, it has created a long upper wick near the descending resistance line. If the price were to stay above this previous resistance area, it is likely to consolidate, before making an attempt at breaking out above the descending resistance line and heading towards $7800. Looking at the movement since November 19, the Bitcoin price could be in the process of completing the right shoulder of an inverse head and shoulders pattern. Yesterday’s low near $6900 fits perfectly with the closing prices on the left shoulder created on November 21. A breakout that goes the entire height of the pattern would have the price reaching $8500. To conclude, the Bitcoin price broke down from a head and shoulders pattern but quickly reversed. If it can hold the support above $7100, it is likely to make a breakout attempt towards $7800. The price is possibly in the process of finishing the right shoulders of an inverse H&S pattern. Good luck and happy trading! For our previous analysis, click here.