Bitcoin Inching Toward $4,000 Despite the Previous $600 Price Drop, Trading Volume Increasing

Since last week’s monstrous dip, bitcoin has been trying to breakout above $4,000, but ample sideways trading, has kept extreme volatility at bay these past few days. With approximately 3 weeks elapsing from the $4,979 all-time and monthly high, the $4,122.7 weekly high is going to have to be cracked beforehand, if we are to see a new rally well above $5,000. The November fork is still far from being resolved, but it could serve as a catalyst moving forward.

Trading volume is trending higher and increasing on Bitstamp, with intersecting trend lines pointing toward the $3,514 weekly low, as a crucial point of interest and strong short-term support. The $2,972.01 monthly low stands out as well, and needs to hold, in case we end up witnessing another reversal before the months end. Furthermore, the $2,979 June all-time high is in close proximity to the monthly low and almost overlaps.

Secondary supports are at $3,516.92 and $3,461.38. If $3,000 breaks, then we can look forward to all of the support levels that are vertically lined up below the $2,935.55 horizontal price support. $2,884.05, $2,823.26, $2,650.82, $2,614.11, $2,573.55, $2,524.98, and $2,399.81 are levels to watch out for, especially if all of the previously mentioned sub $3,000 supports, end up being demolished in rapid succession.

Resistance levels are plentiful, but the $4,122.7 weekly high is of primary concern for now. Prior secondary footholds are at $4,045.87, and $4,001.64 respectively. If the weekly high is lambasted, then the $4,166.68, $4,377.91, $4,481.47, $4,676.44, and $4,700.06 secondary resistance levels are next on the agenda, right before the final push past the $4,979 all-time high.

Fibonacci levels drawn out for the existing trading range show close supports ($4,005.83 & $4,001.64) around the 0.5 fib ($3,977.22), in addition to the 0.618 fib ($4,213.57), which is neighboring the $4,166.68 support.

If we use the $1,832.56 July monthly low from the prior trading range, as the starting Fibonacci level (fib 0), then the different fibs begin to overlap on a much wider number of supports. Of special notice are the 0.236 ($2,572) and 0.382 fibs ($3,032.59), which are bordering countless support levels. The $2,573.55 and $2,981.30 price points, remain the most interesting for further observation.

Bollinger bands on the daily chart are expanding, so heightened price volatility is to be expected. If the median line is crossed, then this can be taken as a short term bull flag. However, the 4-hour is quite a bit different, and the gap between the bands is contracting, this is normally a signal for less trading volatility, although the upper band has been breached a short while ago. The hourly is echoing similar conditions to the 4-hour for now as well.

After a bearish crossover, of the 30-day MA over the 180-day MA during the last price correction, the prevailing circumstances seem to be signaling for another crossover, this time of the bullish kind, so it is reasonable to expect a rise of the 30-day MA in the near-term future. The 365-day MA looks like it has just about concluded a trend decline, another probable bull signal.

The VWMA is trending slightly ahead of the 30-day MA, while the 180-day MA has been touched, and may very well end up being surpassed soon. The EMA has jumped up above both, and is earnestly ascending higher, additionally confirming price movement and momentum.

The MACD has had two bearish (marked in red above) and two separate opposing bullish (marked in green) crossovers within the past 2 days. The RSI & %R Williams indicators are exhibiting severely overbought conditions. OBV has begun to gain traction, and is trending upward in accordance with rising volume.

Bitcoin began trading from the currently unbroken $4,122.7 weekly high on September 18 (GMT 23:00), and after a steady decline, managed to bottom out at the $3,514 weekly low on September 22 (GMT 16:00). The price has since then, risen higher and closer toward the $4,000 psychological resistance level, and may break this foothold by the day’s end.

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