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Sideways Week for Bitcoin
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Bitcoin's big price jump last week was followed by some eventful sideways action punctuated by some strong signals from our array of indicators.
Bullish break may be imminent for Bitcoin
After hitting a high of USD3,700 on February 8, Bitcoin (BTC) consolidated downward in a clear descending channel this past week.
On the 1-hour BTC/USD chart, we saw BTC forming what appears to be a bull flag.
The wick at the bottom of the channel formed a strong bounce off the 200MA (green line), which suggested the bulls are putting up adequate buy pressure to keep the flag intact.
Based on the current market structure, the next test of the channel support should fall below the 200MA.
It's worth nothing that BTC has been making continuous higher lows and higher highs.
BTC’s declining volume profile with the declining price also suggested a bullish break may be imminent.
The potential for underlying bullishness was also highlighted by BTC’s series of higher lows on the RSI indicator which shows a clear bullish divergence with the declining price action.
Zooming out for a macro look on the market over the past week, we can see that the bearish pattern we discussed over the past few weeks is still very much in effect.
Not only is BTC finding resistance against the red trendline, it is also constantly experiencing rejections off the 200MA (highlighted in green).
This macro structure resembles a bearish pennant. Within this context, the current bull flag formation on the shorter time frame is extremely important.
If BTC manages to rally out of the bull flag formation and make a strong close above the red trendline and 200MA on higher time frames, we may see a heavier bullish move in the medium term over the next few months.
In what was likely a stop hunt, the bulls pushed BTC up to USD3,648, but were unable to sustain any kind of positive momentum.
Ethereum breaks through 200MA
Compared to BTC, the price action on Ethereum (ETH) price action was relatively bullish this past week.
Instead of forming a descending channel, ETH has formed a clear ascending channel, reaching a high of USD125 after breaking through the 200MA at USD105.
Over the last 24 hours, volume has dropped significantly, so we may see ETH retrace down for a corrective move to test the 200MA on the hourly chart.
However, in the short term, ETH appears to be displaying bullish properties and we may see a further run to the upside if BTC’s bull flag formation plays out.
XRP looks primed
After hitting a high of USD0.32585 on February 8, XRP retraced down to USD0.301 before trading into a tight consolidation pattern.
Unlike BTC and ETH, XRP’s current pattern is comparatively conflicted.
During the first half of the week, XRP was forming a clear structure of lower lows and lower highs.
At the end of the week, XRP finished off with a bullish move to the upside before moving into a consolidation pattern that is getting tighter and tighter.
At the moment, EMA20, EMA40, and MA200 on the 1-hour chart have almost flat-lined, which suggests an impulsive breakout is imminent.
Zooming out to the 4-hour chart, we can see that RSI is also consolidating into a tight range similar to the behavior of XRP’s price action. With this in mind, a breakout could occur over the next day or two.