Bitcoin Analysis: Bearish reversal confirmed, eyes $3500

Omkar Godbole FXStreet Contributor

Bitcoin [BTC] may have topped out, at least for the short-term at a time when its rival Bitcoin Cash [BCC] is scaling new heights. Thursday’s Doji candle [bullish exhaustion] on the BTC daily chart, followed by a negative price action on Friday confirmed a bearish trend reversal.

As per coinmarketcap.com, BTC has shed 2% over the last 24 hours to trade around $4042 levels. Its rival BCC clocked record highs above $900 over the weekend, before shedding 10.8% in the last 24 hours to trade around $704 levels.

Volumes rise

Volumes in bitFlyer jumped 17.9% in the last 24 hours. This adds credence to the bearish price reversal and suggests the sell-off is likely to be extended this week. Meanwhile, BCC’s volume on Bithumb has jumped 41.59%. As per cointelegraph.com, the trading volume in Bitcoin Cash has overtaken Bitcoin.

Gatecoin CEO sees BTC rallying to $5000 this year

While talking to Bloomberg on Daybreak Asia show, Aurélien Menant, CEO of Gatecoin [Bitcoin and Ethereum token exchange] said, “Uncertainties in other markets are driving more and more interest in Bitcoin. Another factor that is very important is the arrival of more and more institutional investors.” He described the virtual currency as a safe haven and said that prices could rally to $5000 this year.

Technicals

Daily Chart

Bearish Doji reversal confirmed
5-DMA has topped out
14-day RSI has turned lower from the overbought territory

4-hour Chart

Bearish RSI divergence
Head and Shoulders breakdown on the RSI

Support

$3938 [4-hour 50-MA]
$3802 [Supp on 4-hour chart]
$3454 [38.2% Fib R of July 6 low - Aug 17 high]

Resistance

$4143 [1-hour 100-MA]
$4322 [Aug 14 high]
$4464 [last week’s high]

View

BTC has topped out as indicated the bearish Doji reversal on the daily chart and the bearish price RSI divergence and head and shoulders breakdown on the 4-hr price/RSI chart.
The currency looks set to test support at $3802 and possibly extend losses to $3500 levels.
On the higher side, only a break above $4133 would open doors for re-test of $4300-4350 levels.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.