Higher lows continue to be printed, but there are some near-term concerns. Soe even though prices remain above the current channel, there is a probability of a move lower due to near-term price resistance, zones we will look at right now.

 

Bitcoin above bull flag, but could be looking to test the top of that channel as support

 

Ever since the break above the bull flag on January 1st, 2019, traders have attempted to push Bitcoin higher but has been halted from doing so. The most recent swing high was very near the open of the December 2018 monthly candlestick. Bitcoin promptly began to trade lower from that price range, with most selling occurring just before the New York lunch hour on January 3rd. If you were to go to a 1-minute chart, you would see that there was strong selling within that 1-minute candle, with Coinbase registering 512 Bitcoin sold – that single sell created the majority of the downside pressure throughout the trading day. Nevertheless, price remains above the bull flag, but it looks like speculators may be pushing prices, again, lower. Testing the top of the bull flag’s channel would mean retesting the open of monthly January 2019 candle.

                From a weekly standpoint, the current trade week is an inside bar, which can create a number of trading possibilities. A common strategy for inside bars is to short when price exceeds the current inside bar low and to go long when then price breaks the inside bar high. However, some strategies recommend that in order to take a trade counter to the primary trend, one should wait for the high/low of the prior bar. In the case of the current Bitcoin weekly chart, the high that would need to be breached of last weeks bar is the 4239-value area. A break above that level would mean traders have not only breached the prior week high, but also the prior month high. A break of that level would be extremely important because there has not been a monthly candlestick that has exceeded the prior month’s high in over 6 months.

                There remains a possible inverse head and shoulders setup on the daily chart – but it will prove difficult for prices to move higher. It should be noted that any breach beyond the 4200 to 4400 price zones would generate a probable brand new trend into the upside. Sellers have been in staunch and clear control of Bitcoin’s price action for over 365-days – which may continue to past 400-days. The reason for the length of the continued move beyond the 400-days is due to prior price action and a prior pattern that occurred in 2013. This could very well be the probable trade behavior we observe until the SEC announces a final decision regarding the VanEck Bitcoin ETF. The date for that final decision is the 27th of February. I am not looking at a bearish result for February 27th, even if they deny the ETF. What I do expect is if there is a ‘soft-denial’, the SEC will follow up with some easy to understand guidance for any of the future ETFs – basically it would give all the companies an equal start to the ‘race’ for the first Bitcoin ETF and would prevent any hint of favoritism from the SEC.