Bitcoin doesn’t appear to be ripe for a bullish break just yet
Bitcoin’s rise to a multi-month high could be part of the consolidation that start a few weeks ago; the short-term uptrend remains intact and what are the key levels to watch?
Bitcoin short-term technical outlook - bullish
Subdued upward momentum associated with the recent jump suggests Bitcoin’s rally is showing some signs of fatigue as it tests a tough hurdle.
BTC/USD hit an eight-month high on Thursday and is now testing a crucial ceiling at the August 2022 high of 25,200, near the 200-week moving average (now at about 24,925). BTC/USD needs to clear the 24,650-25,200 area for the medium-term downward pressure to ease
BTC/USD daily chart
Despite the rise to a multi-month high, the 14-day Relative Strength Index (RSI) failed to mirror the strength. Indeed, the lower high in RSI is a sign that BTC/USD may not be ripe to break past the immediate barrier at 2,4650-25,200 just yet.
In other words, the last week’s jump could be part of the broader consolidation that started end of January, and not the start of a new leg higher.
Bitcoin could continue to remain in the recently well-established range 21,350-25,250 in the interim. Meanwhile, the short-term trend continues to be bullish after it broke in January above resistance on the 89-day moving average (a significant barrier since mid-2022), coinciding with another barrier at the mid-December high of 18,370.
The subsequent break above the 200-day moving average has confirmed that the downward pressure has indeed faded.
However, for the nascent uptrend to continue, Bitcoin needs to clear the 24,650-25,200 hurdle.
This is especially so if the pattern since mid-2022 is indeed part of a broader base building in cryptocurrencies. On the downside, there is fairly strong converged support at 19,800-21,350 (see the daily chart). The short-term upward pressure is unlikely to fade while BTC/USD holds above the floor.
BTC/USD weekly chart
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Live prices on most popular markets
- Forex
- Shares
- Indices
