Bitcoin recovery rally fizzles out as price plunges below $4,000

CoinDesk analysis

Sebastian Sinclair writing at CoinDesk provides an analysis of the price movements of Bitcoin (BTC) posted at 13:22 UTC today. Sinclain notes that the recent Bitcoin rally above the $4,000 range was beaten back over the holiday putting pressure on the bulls to somehow gain momentum.

Bitcoin reached $4,140 on December 21 and then went to over $4,200 on Xmas eve, but by early on Xmas day it was back at $3,720. After a short bounce it had settled at $3,762 at the time Sinclair’s article went to press according to CoinDesk data.

Bitcoin may be consolidating under a lower low, that could potentially build momentum for another rise above $4,000 should buying pressure keep on above two key resistance levels.

Chart analysis

Intra-day lows close to the $3,675 support level makes Bitcoin appear weakened, having fallen victim to a holiday sell-off.

In a previous article Sinclair had discussed a possible visitation to the resistance at $4,400 shown on the daily chart. However BTC barely made it to $4,236 before it was taken back down to lows not seen since December 20. Volume is falling with rising prices as shown in smaller time frames such as the one hour chart. Pressure is mounting for the bulls to make a play above $4,200 or the short term uptrend may end. For their part, the bears will be hoping that they can force the price down below the immediate support line of $3,650.

The 2-hour volume bars vary as price action continues to subside from the sell-off on December 24th to 25th. This means reactions are mixed and traders are beginning to be anxious at these levels. This could precede another move down most likely.

Sinclair’s outlook

Based on his technical analysis Sinclair’s view is: “A short-term sell-off showed Bitcoin’s temporary support lay at around $3,675 with a small bullish bounce triggered from that zone. Bitcoin was rejected from around $4,200 on Dec. 24/25, signalling bullish exhaustion. A drop below $3,650 would dash short/mid-term bullish hopes heading into the new year.”

Present situation

24 hours ago Bitcoin opened at $3,832 according to CoinDesk data. The low has been up to now.$3,682 and the high $3,858. At 20:10 Central Standard Time BTC was trading at $3,727 according to CoinDesk data. This is down $105 from the open or about 2.7 percent. The trend is down with no challenging of the $4,000 level. The $3,675 level resistance has held so far but just. Bitcoin may need to test some resistance levels before returning to any recovery rally or it may even reach new lows before the year end. The present price of Bitcoin can be found here.

This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com

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