Bitcoin trading in a very narrow range between $6,400 and $6,500

CoinDesk analysis

A recent analysis by Omkar Godpole was updated not too long ago at 22:45 UTC. Godpole notes that the Bitcoin (BTC) price has flatlined after forming a bullish pattern last week. He maintains that only a rise above $6,800 would allow the bulls to be in a commanding position, at least according to technical charts.

On Monday a week ago, Bitcoin set a four-week high of $6,810 on Coinbase. However, it ended the week back at $6,415. However, it did gain 3.7 percent on the week.

Godpole notes: “The bull move last week saw the creation of what’s called an inverted hammer candle. This is characterized by a long upper “shadow” (the difference between the weekly high of $6,810 and the weekly close of $6,415) and a small “body” (the spread between the weekly opening price of $6183 and the closing price of $6,415).”

The inverted hammer formation is regarded as a sign that there has been a bullish reversal when it happens at the bottom of the downtrend and the upper shadow is twice the size of the body of the candle. The longer the upper shadow the more probable it is that the reversal will happen.

The indicator showed itself near the $6,000 level. At that level it seems likely that Bitcoin has formed a classic bottom. However, the upper shadow is short only 1.7 times the real body. This casts some doubt on the bullish reversal. As such the immediate future stays neutral rather than bullish. Only a move above the $6,800 level would confirm there is indeed a breakout of the bulls.

Chart analysis

The weekly chart shows that the long sell-off from the record high near $20,000 last December has finally run out of steam near the $6,000 level. A move by BTC beyond last week’s high of $6,810 would confirm the bullish inverted hammer and increase the prospects of a sustained move higher toward the September high of $7,402.

The daily chart shows a very low level of price volatility as the spread between high and low was a meager $47 dollars yesterday. This is not much more than the 17-month low of $34 reached on October 13.

A period of low volatility is usually a sign of a large move one way or another but so far this has failed to occur. We could expect a more vigorous trade in the higher side due to last week’s bullish hammer candle. However, Godpole admits that BTC has been trading in a narrow months for literally months now and there has been no sustained shifts up or down.

CoinDesk outlook

Based on his analysis Godpole’s view is: “$6,810 (high of last week’s inverted hammer candle) is the level to beat for the bulls this week. A break above $6,810 would raise prospects of a sustained move above $7,402 (September high). On the downside, the 21-day exponential moving average (EMA) of $6,121 is acting as key support.”

Present situation

It is now October 23rd UTC. Just a little over an hour into the new day, BTC was trading at $6,454. The day opened with BTC at $6,448. The low so far was only two dollars below that. The high was seven dollars above. Bitcoin is still trading in a quite narrow range in a sideways manner. There is no sign as yet of a strong upward movement.The present price of Bitcoin can be found here.

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