Price consolidated for a number of months leading up to the bearish price crash that took place in November of 2018.
This price crash was sparked by a significant sell-off that resulted in price staying within the downward trend line which had been forming for the majority of 2018.
Is this trend line still relevant? Some analysts would say that the trend line is no longer relevant since the November breakdown as this sell-off resulted in an execution of a descending triangle pattern.
A descending triangle pattern is a bearish trend continuation pattern that forms when price meets resistance at a downward trend line and also meets support below.
However, the price is currently exhibiting similar behavior to before the breakdown in November.
Price has been consolidating since January forming both higher lows and lower highs. The downward trendline is also approaching once again, and it is something to monitor given its strong relevance throughout 2018.
$4150 to $4250 is another key area to monitor with the price already after finding seller liquidity numerous times here.
Litecoin can often act as a leading indicator of price performance in Bitcoin. A significant increase of over 10% in price in Litecoin earlier this week preceded an increase in bitcoin
Litecoin has recorded a strong performance so far this week overcoming a key level where price broke down in November. Price has continued increasing and has today overcome a key level where price broke down in October.
It is yet to be seen whether price can close above this level on the daily as sellers may come in to bring the price back below before the candle closes.
The shorter term 4-hour chart shows price tested the $57.49 numerous times before breaking above. Each test makes the level progressively weaker with fewer sellers to hold the level on each test.
A bearish divergence between the price and RSI is currently forming on the 4-hour chart with the price forming higher highs and the RSI forming lower highs.
This is a bearish trend reversal pattern that shows price continuing to increase despite buying pressure falling.
However, this pattern typically has lower predictive power, and if the price can close above the October breakdown level at $57.49 on the daily, this will be a far more bullish signal.
- Bitcoin is approaching a downward trendline which was extremely important for its price performance in 2018.
- A key area of seller liquidity to monitor for Bitcoin is $4150 to $4250.
- Litecoin has recorded a strong performance so far this week overcoming two key levels where price broke down in October and November.
- Litecoin has yet to close above the October breakdown level at $57.49, but a close above would be a bullish sign.
- Bearish divergence forming on the 4-hour chart for Litecoin.