Happy New Year, Infernites! What a year it’s been, and what a year we’re going to have in 2019!
We start the year much as we ended the last one: in a holding pattern, waiting for this market cycle to play out one way or the other. In the last few days, we’ve seen an increasing number of people calling the bottom as bitcoin soared over 30% from its 2018 low of $3,122. Conversely, plenty of analysts see it as no more than a dead cat bounce and are waiting for the bears to take over once again.
Looking at the charts, it’s pretty neutral. RSI is reading a little oversold on the daily and 4h, but only just. There’s support at $3,600 we haven’t convincingly broken since the bounce from $3,100; equally, though, bitcoin has posted a series of lower highs after failing to maintain $4,250. Combine that with thin holiday trading volumes, and you have a powder keg for manipulation and sudden moves. Volumes have dropped off a cliff over the last week and so nothing that happens can be considered definitive until they pick up again, which will presumably happen over the coming days as the holidays end.
For a while, it looked like a bullish inverse head and shoulders was forming on the 4h, but that appears to have been invalidated as the price slips lower again, failing to breach the neckline at $4,300. Instead, a downward-sloping resistance line is becoming ever-clearer, with those lower highs providing a ceiling for price. To the downside, we also have the 200 weekly moving average, which has – so far – proven good support. We would expect that to be retested before the trend resolves one way or another. The last time it was hit, volumes were so low it cannot be taken as a price floor.
In short, it’s a waiting game. With the new year and new infrastructure we would expect renewed optimism, especially after a full year of bear market. But that’s not to say we won’t have one last shakeout first, or that the trend won’t continue a while into Q1.
The good news is that, after all the pain of 2018, it’s practically certain that 2019 will end better than it started.
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