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Bitcoin - Look for a Short-term Consolidation in the 420-440 Area

2014 has been a bearish year for bitcoin, coming down from a high on the year in early January at 995 to 340 in April. Then it rallied to 680 and formed a descending triangle. After forming the triangle through June and July, price fell below the triangle support around 550 in early August. This opened up the 420-440 area, which represents common price from a consolidation period between April and May. With the daily RSI in oversold territory, we can expect some consolidation, bullish correction ahead at least for the short-term.(bitcoin daily chart 8/19)

A bullish divergence between price and the RSI in the 4H chart also suggests a near-term to short-term bullish correction, or consolidation. If we do get a bullish attempt, watch for resistance at: R1 = 500 (psychological level), R2 = 520 (recent highs), R3: 550-555 (triangle support).

There is still further downside to 420. If bitcoin price breaks below 420, it will open up the 2014-low at 340.(bitcoin 4h chart 8/19)