Over the past two days, BTC has tested once the dangerous zone of $3480 – $3500 and the second slide had produced a hammer type candle (on the 4-hour chart) with a low at $3400 as a long wick.
Hammer candles tend to be bullish reversal candles. This is how capitulation candles look like. However, this candle is on the 4-hour timeframe and not on the daily or weekly charts.
Following the above reversal candle, BTC had a mini-run to previous resistance at $3600, along with the 50 days moving average line (marked in purple on the 4-hour chart) and a descending trend-line (marked by an orange line).
From our previous analysis: “the 4-hour Stochastic RSI had just crossed over around the oversold area. This might lead to a slight correction, maybe to retest prior support that was broken. Possible correction levels could be the $3600.”
As of writing this, Bitcoin got rejected by the $3600, and some more indicators support the idea that a break-up of this level won’t be so easy.
Looking at the 1-day & 4-hour charts
Looking on the bullish side, the next significant resistance is $3600, as mentioned above. Above that level lies the daily chart’s 50 days moving average line (marked in white, currently around $3650), the $3700 and $3800 areas.
From the bear side, the next major support area is the $3480 – $3500. Below this crucial level, lies the $3400 (weak support) and $3300 support level. This is before retesting the 2018 low at $3120.
The 4-hour chart’s Stochastic RSI oscillator had just crossed over at the overbought zone. This can produce a correction down for the next day or two.
The daily chart’s RSI: So far the crucial line at 43 holds up.
The trading volume is still pretty dull; even though yesterday’s green candle was highest during the past week (on Bitstamp). But we still seek to see volume entering the market in either way.
BitFinex’s open short positions had decreased to 22.4K BTC of open positions.
BTC/USD BitStamp 4-Hour chart
BTC/USD BitStamp 1-Day chart
The post Bitcoin Price Analysis Jan.23: The Next Resistance – Descending Trend-line at $3600 appeared first on CryptoPotato.