As Bitcoin’s consolidation phase continues on the charts, opinion is divided among market observers and traders alike as to whether Bitcoin is indeed in a prolonged bear market. Findings of a report on the same were discussed in a recent article, but what cannot be denied is the fact its volumes have dropped steadily over the past couple of months.
This has negatively affected Bitcoin’s short-term trajectory which still shows no signs of a clear recovery. At the time of writing, Bitcoin traded at $31,808, down by a marginal 0.2% over the last 24 hours.
Bitcoin 4-hour chart
Source: BTC/USD, TradingView
Over the past four days, Bitcoin’s price has fallen into a lull. Prices have oscillated between their 23.6% Fibonacci Extension at $31,261 and the $32,000 upper ceiling. What’s more, is that BTC’s metrics revealed that the lack of volatility would last for a few more sessions and possibly over the coming days as well. Until volatility returns, it was crucial for Bitcoin to maintain above its 23.6% Fibonacci Extension in order to fuel a bullish narrative moving forward. Failing to do so would likely see the king coin tread lower towards weaker support levels at $30,000 and $28,600.
Reasoning
Although Relative Strength Index traded at equilibrium, its upcoming move would be of particular significance. A rise above 50-55 would denote a rising trend for BTC, whereas rejection at 50 would diminish the chances of a favorable outcome. On Balance Volume noted a slight uptick and suggested that buying pressure managed to outpace selling pressure over the past few sessions. However, an ADX reading of 18 suggested that the market was becoming less directional- something that could prolong BTC’s consolidation phase.
Conclusion
Low volatility and receding volumes indicated some more sideways movement for BTC- possible between its current channel of $31,000-$32,000. Buying pressure was on the up and if bulls press home their advantage, prices would likely push north once volatility returns. Meanwhile, traders must be cautious of a decline below $30,000 as this could open doors for an even sharper retracement. A wait-and-watch strategy would be the safest bet in the market right now.
