Bitcoin recently busted through the descending trend line resistance visible on its 4-hour time frame, indicating that a reversal might be due. However, the price is hitting resistance around $3,800 so a pullback might be needed to draw more bullish momentum to sustain the climb.
The 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the downtrend is more likely to resume than to reverse.
Then again, Bitcoin is trading above both moving averages so these could hold as dynamic support moving forward. Also, the gap between the moving averages is narrowing to signal weakening bearish pressure and a potential bullish crossover.
The Fib retracement tool shows that the 61.8% level is closest to the broken trend line and may be the line in the sand for a pullback. This is also close to the 100 SMA dynamic support.
RSI is still pointing down to signal that sellers are taking over while buyers take a break from the sudden rally. Stochastic is also making its way down from the overbought zone to indicate that sellers are taking over while buyers are exhausted. Both oscillators have some room to go before hitting the oversold region, so selling pressure could stay in play for a bit longer.
The recent rally could draw more fuel from bullish forecasts being revived. For one, Tom Lee of Fundstrat says that technical analysts are being less bearish on BTC these days. This follows a claim that Bitcoin could reach $5,000 over the next 10 days as tweeted by Mitoshi Kaku, a popular cryptocurrency trader:
I wouldn’t be surprise at ALL, if the price goes straight to $5K in the next 10 days. The conditions are present TA-wise. Obviously that sort of move would need a strong catalyzer, but anything is possible when it comes to price action.
Images courtesy of TradingView