Since the devastating decline dropped BTC towards $3,800, the biggest cryptocurrency made a slight recovery. At the moment, the price of Bitcoin is at $6,600 as the rally seemingly continues. But will it last? To answer that question, CoinSyncom’s technical analysis team did their homework in the form of a Bitcoin surge technical analysis which may provide valuable insight.
Bitcoin Technical Analysis – the Surge Channel
Currently, Bitcoin is forming a rising channel that started at $5,300. The BTC/USD 1hr Coinbase chart below shows the situation in the best possible manner. The higher lows were at $5,300 and $6,00 while the highs marked two peaks at $6,400 and $6,800.
While the rising channel is a great formation to trade inside the bullish trend, there are more than a few indicators that should inspire the highest level of caution with traders.
The first two things we deem noteworthy are MACD and RSI readings. Unfortunately, during the mini-pump, both of these technical indicators failed to support price growth. Instead, they formed clear divergences.
The 1hr BTC/USD chart below clearly shows that the price, despite being in a positive mini-trend, looks unsupported by the volume and, consequentially, MACD and RSI.
More often than not, these occurrences mark the beginning of the trend reversal. Therefore, it would be wise to prepare for it accordingly.
Fibonacci Levels of Possible Retracement
It is quite possible for Bitcoin to make another one or even two peaks inside the rising channel (the blue markers in the chart below). Yet, if the price movement doesn’t get the needed volume support, it will be hard to expect the rebound to continue.
Let’s see some possible outcomes.
The Fibonacci 0.5 level resisted the price surge at $6,800. If Bitcoin is to reach a new higher high inside the channel it has to break through that resistance. There isn’t any more room for stagnation between the resistance line and the rising support of the channel, therefore, BTC has to do it quickly if it doesn’t want to sink towards lower levels again.
If indeed the number one cryptocurrency manages to do that, the next resistance test awaits at exactly $7,400 marking the 0.618 of the Fibonacci retracement.
On the other hand, if Bitcoin slides outside the rising channel, it is entirely possible for it to go even below the 0 Fibonacci at $4,400.
The Wider Picture of the Bitcoin Surge Technical Analysis
As we stated in yesterday’s news piece, in the biggest cryptocurrency derivatives market, BitMEX, things don’t stand as well as it may seem. The open interest indicator indicates that no new money is being pumped into the market, which is yet another trend reversal indicator we have to take into consideration.
In the end, remember that the volatile nature of the cryptocurrency market may overrule this Bitcoin surge technical analysis. If die-hard investors who exited the traditional markets start entering crypto, we might just make it back to years highs.
Nevertheless, that is a faraway possibility since the coronavirus panic doesn’t leave much hope in the first place. Therefore, set your stop-losses and don’t be afraid to pull the trigger on those gains.
All charts in the article were analyzed on Coinalyze.net – the professional trader’s analysis tool.
You should look elsewhere for investment advice since this isn’t it. Even if it looks like it, it’s not. Cryptocurrencies are extremely volatile and risky speculations. Always do your own research. Consider consulting an investment professional prior to investing your money.
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