Bitcoin Weekly Chart – Source: TradingView.com
This week marked the first significant surge for the price of Bitcoin since extremely bearish conditions overcame the market in mid-November.
The rise in price overcame the losses of the past two weeks.
This surge took place after price formed a 2018 low around $3150 indicating that traders may not be willing to accept valuations below $3000.
Strong support would be expected if a return to this level were to take place.
Bitcoin Daily Chart – Source: TradingView.com
After the first bearish drop of the week which brought price from around $4100 to $3800, price action is back trading at $4000 which is proving to be a key level.
$4000 is both a key psychological area for traders and a significant amount of trading activity has also taken place around this area over the past few days.
Bitcoin Hourly Chart – Source: TradingView.com
A bearish divergence which took place between the price and hourly RSI preceded the drop to $3800.
A bearish divergence is a typical trend reversal pattern and occurs when the price goes on to form higher highs despite the RSI forming lower highs.
This shows price continuing to increase despite buying pressure falling off. Price has since managed to rise back up to $4000 and is currently meeting some resistance at this point.
The outlook for Bitcoin is currently neutral. Buying momentum is building back up supporting a case for price driving above $4000.
Altcoins are performing well also which would further support this case.
Given, the extremely bearish conditions of the past month, another price drop is also a strong possibility.
This week marked the first significant surge for Bitcoin since bearish conditions overcame the market in mid-November.
A bearish divergence between the price and hourly RSI preceded a price drop which brought Bitcoin back to $3800.
Price has since recovered to meet resistance at $4000 which is proving to be an important level.
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