Bitcoin Consolidation Will Likely Continue For a While

7 Mar 2019

Its been a little while since we’ve conducted a full price analysis, so we’re going to take another look at where Bitcoin may be headed in the coming hours, days, and weeks.

Fortunately, we were successful in our last analysis of Bitcoin, which you can find here:

In the picture above, we can see where the price has failed to breach the ‘resistance area’ at 4K-4.2k on three separate occasions.

The most recent time that this happened occurred shortly after the last price analysis was published.

The question now remains on whether the price will be able to breach this resistance point or face denial once again.

Relative Strength Index (7)

Without further delay, we’re going to look at the RSI(7) on the daily resolution:



The first observation worth noting is the pattern of increased ‘lows’ for the RSI(7) on the daily resolution spanning back to late November.

It could be said that there is a pattern of increasing ‘highs’ as well, but that all depends on which highs that one is counting on the chart above. No matter how the above chart is dissected, though, it is clear that the last high is higher than the previous one. Thus, if the RSI(7) does continue, and it breaks the previous high, then passing the 4K-4.2k marker is more than plausible.

Balance of Power RSI (Custom Indicator)

As noted in previous price analysis articles, this is a customer indicator that is designed to measure buying and selling strength.

Increases in the indicator’s value are correlated with increasing buy pressure. Decreases in the indicator’s value are correlated with increasing sell pressure.



From March 4th to present time, there’s been a stark increase in buy pressure, which is notable.

This correlates with what the RSI(7) is doing on the daily resolution as well. So, overall, things are looking fairly bullish at this point for Bitcoin.

Potential Flat Top Chart Formation Developing on Bitcoin (Ascending Triangle)

If we zoom out a little bit on the Bitcoin daily resolution, we can see the following:



While the ‘top’ of this potential flat top pattern is not ‘perfect’, per se (i.e., 90 degree angle), the ‘tops’ have created a virtually ‘even’ line at this point.

Volume is Confirming the Possible Presence of This Pattern as Well



The chart above shows descending volume as this potential chart pattern is forming itself.

Given what we’re seeing above, there are a few things that need to happen in order for this chart pattern to remain valid:

1. Each successive low must be higher than the one before it (the underlying trendline must hold).

2. Each ‘high’ that is formed must be at that overhead resistance (until breakout).

3. Breakout should be accompanied with a massive spike in volume.

Zerononcense Reversion Ribbon V2 [Custom Indicator]




In the chart above, the Zerononcense Reversion Ribbon V2 is signaling a few positive things on the daily resolution.

Namely, we can see that the ribbon has turned ‘green’, once again, which is a preliminary buy signal (signal lines crossing). Despite the indicator being superimposed on the normal price chart, we can see the significant divergence between the indicator and price.

The indicator is also right above the Histogram (the zero line), which tells us that its in ‘positive’ territory. So we can definitively state that the indicator is noting positive buy pressure for Bitcoin on the daily resolution rather than just a decrease in sell pressure (convergence when the indicator is ‘red’).

Exponential Moving Averages

We’re going to take some time to briefly cover the exponential moving averages on the daily resolution, because there are a few observations that are absolutely worth noting moving forward.



The overhead resistance created by the EMA-100 is still worth noting at this present moment in time.

However, it is also worth noting that the EMA-50 has served as a very strong source of support as well.

At some point, Bitcoin will have to either definitively break above the EMA-100 or below the EMA-50. In either case, momentous price action should be expected.

The author is placing their bets that the price action will eventually break above the EMA-100 resistance point.

Looking Back at the RSI(7) on the Weekly Resolution



The tremendous positive growth of the RSI(7) on the weekly resolution is absolutely undeniable at this point in time.



Of course, there’s the existence of this on the monthly resolution as well:



Of course, the above is merely a speculative assumption based on the fact that the RSI(7) on the monthly resolution appears to be presenting a ‘curve’ upwards at approximately the same level that it did after the conclusion of the prior bear market (beginning of 2015).

As to whether this will happen or not remains to be seen.

Notably, the Balance of Power RSI is showing significantly greater negative sentiment than what was exhibited at the end of the 2015 bear market:



Conclusion

Bitcoin is producing a very tentative buy signal and longer-term projections are still too premature to make any definitive forecasts.

This trade idea is not accompanied with an R/R because there are too many intermittent, conflicting price signals.

It is expected that the price will stay within the 3.6k-4K price range over the next few days.