Bitcoin Price Movement Splits Bullish and Bearish Analysts [Premium Analysis]

On December 17 and 18, the Bitcoin price broke down below a significant support area and reached a low of $6400, causing many people to believe that was the start of a continued price crash, similar to the one that caused BTC to drop to $3000. However, the price initiated a strong reversal the same day and has increased by 18 percent since, reaching highs of $7600. Thus, the cryptocurrency community is torn between being bullish or bearish. Trader @postyXBT outlined his reasons for still being bearish in regards to the Bitcoin price. They include previous resistance areas that have yet to be reclaimed.

For those asking why I'm still in my $BTC short…

It's quite simple for me, really. pic.twitter.com/namrfXzmZv

— Posty (@PostyXBT) December 23, 2019

However, another well-known trader, Scott Melker, used the stochastic RSI to make a bullish argument for BTC.

(2) The second preceded the pump from $3,200 to $14,000 (!!!) and the third predicted the move from $7,400 to $10,400 just weeks ago. What will the fourth one in the sequence do? pic.twitter.com/GIE4l6qt2d

— The Wolf Of All Streets (@scottmelker) December 23, 2019

Let’s analyze the price in different time-frames and determine whether the price movement is bullish or bearish.

Bearish Case

The Bitcoin price has been trading inside of a descending channel since reaching a high on June 24. Initially, the price created a support area at $9600 that lasted until September. After the price broke down, it validated it as resistance and continued moving downward. Afterward, the price found support above $7500. While it broke down below this area at the end of October, the lower levels could not be sustained and the price is currently in the process of increasing above this area. Additionally, last week’s candlestick had a very long lower wick which bounced on the support line of the channel, suggesting that the Bitcoin price will break out above the resistance area. Finally, the 50- and 100-week moving averages (MA) are very close to making a bullish cross and the price is moving above them. Therefore, a breakout above the first resistance area would likely cause the Bitcoin price outlook to turn bullish — at least in the medium-term. First, the price has to break out above the descending resistance line and head towards the next resistance area at $9700.

Bullish Case

The bullish case comes from the weekly stochastic RSI. Since 2017’s high, it has generated bullish divergence on three occasions:

1. Feb-April 2018: Lead to a 59 percent increase
2. July-Dec 2018: Lead to a 305 percent increase
3. Aug-Sept 2019: Lead to a 43 percent increase

The RSI has been generating divergence since October, suggesting that another upward move will transpire. The bullish outlook is also supported by Bitcoin’s block-reward halving and its previous history, which suggests that as the supply of Bitcoin gets scarcer its price will increase substantially.

Future Movement

A bullish outlook is also given by the daily time-frame. The Bitcoin price has created a double bottom, combined with a bullish divergence in both the RSI and the MACD. A breakout the entire height of the pattern would take the price to the resistance line of the descending channel near $9000. To conclude, we believe the Bitcoin price is bullish, albeit price action has yet to confirm this. A weekly close above the first resistance area at $7600 will act as a confirmation. A possible breakout from the channel would essentially remove all doubt for us that the price will move higher.