We present you a translation of an article analyzing the Bitcoin market from analyst Omkar Godboul. In the article, he gives his forecast for the development of the situation on the cryptocurrency market: the positions of the BTC market bears will weaken if the price rises above the key resistance level ($ 4140).
As expected, earlier today, the leading cryptocurrency jumped to a two-week high ($ 4,090), ending the weekly low-volume consolidation period of about $ 3,800.
It is noteworthy that the breakthrough above $ 4000 added even more confidence in the short-term trend reversal (from bearish to bullish), as evidenced by the 3-day schedule of December 20.
However, the task was completed only by half, since the price has not yet overcome the resistance of the $ 4140 mark - the level of the neck of the bovine reversal pattern “inverted head and shoulders”. A convincing breakthrough above this level will return the initiative to the bulls.
At the same time, the long-term bullish reversal will be confirmed only above the previous level of support, which has become a resistance, of the 21-month exponential moving average ($ 5,567).
At the time of writing this article, Bitstamp BTC is trading at $ 4,000, an increase over the last 24 hours was 5%.
As can be seen above, BTC has formed an inverted “head and shoulders” pattern, which is a transition from a bear market to a bull market, namely, a minimum followed by a recovery (left shoulder), a bearish lower minimum and a recovery (head), and Finally, a bullish higher low and recovery (right shoulder).
Breakthrough of such a pattern usually leads to a powerful upward movement. Thus, BTC can grow well above $ 5000, if the resistance of the neckline, which is currently $ 4140, will be overcome against the background of high trading volumes.
In addition, the cryptocurrency gained support above the 50-day moving average (MA), while the 5-day MA and 10-day MA are directed northward, indicating a bullish mood in the market. The 14-day Relative Strength Index (RSI) is also favorable to bulls.
Consequently, the chances of a bullish break above $ 4140 seem high.
On the monthly chart, the situation remains bearish, as long as BTC is trading below the 21-month EMA ($ 5,567). Interestingly, the trend line connecting the highs of December 2017 and November 2017 is also located near the 21-month EMA.
Thus, forcing a long-term breakthrough will be a difficult task for the bulls, especially since the 5-month EMA and the 10-month EMA are still moving south (bearish). As a result, these EMAs - currently located at $ 4,791 and $ 5,651, respectively - can act as hard resistance levels.
Forecast for the future
A breakthrough of the inverted “head and shoulders” pattern, if confirmed, will signal a significant bullish reversal and may lead to a rapid increase to the level of psychological resistance ($ 5000).
A break above a 21-month EMA ($ 5567) could lead to a long-term bullish break.
The inability of BTC to overcome the resistance of the neckline ($ 4140) and the subsequent break below $ 3566 (minimum of the right shoulder) is likely to encourage bears and allow them to retest the recent minimum at $ 3122.
