Bitcoin (BTC) has just hit horizontal resistance, plus the top of a wedge formation. Will the price break through, and head back over $100,000, or is it about to get rejected and fall back down to $92,000?
Nearly three months of sideways price action
The current sideways price action for Bitcoin has been going on since mid-November of last year. Nearly three months of this, and Bitcoin is still tied up within a range that stretches from $92,000 at the bottom, to $106,000 at the top.
Of course, the price has popped out of this range on a few occasions, particularly to hit the last top at $109,000, and also to make the low at $89,000. Other than that, it has been fairly serene for Bitcoin, as it gathers strength for the next leg higher – or perhaps prepares to fall back down to the low $70K region.
Probable rejection for $BTC?
Source: TradingView
Looking at the $BTC price on the short-term time frame it does rather look as though a rejection of the resistance and the descending trendline is about to take place. This would make sense, given that the Stochastic RSI on the 4-hour is near the top. This is also the case for the 8-hour, while the 12-hour is just starting to break into overbought territory.
That’s not to say that there may not be one last push from the bulls that does actually break through the resistance. Although the chances would be high that this would just be a fake-out, before the price returns inside the wedge.
That said, as it stands, the probabilities are that the price does indeed get rejected from here, and that this next dip may take $BTC all the way back down to the ascending trendline.
The bottom of the dip would then perhaps coincide with the short-term Stochastic RSIs bottoming, and ditto for the far more important weekly Stochastic RSI.
Two possible scenarios
Source: TradingView
The daily chart shows how the current price may also be getting rejected from the 50 SMA (blue line). At the same time, the 100 SMA (green line) is coming up underneath the price. It may be that we eventually see the kind of sideways and slightly downwards movement of these two lines, just as was experienced in the earlier really long bull flag.
It may well be that we see a cross of the 100 SMA over the 50 SMA, which would be bearish, but this would also be the normal state of affairs given the sideways movement the price is currently following.
To summarise: two scenarios may play out here. The bullish scenario is that the price perhaps returns to retest the ascending trendline, and then heads back to the highs. The bearish scenario is that the price is rejected from here, but that it then makes a lower low below $89,200, confirms the breakdown, and then drops to the region of the top of the previous bull flag at around $73,000.
Nevertheless, even if the bearish scenario does play out, a retest of the top of the last bull market could be an amazing final opportunity to buy. Also, if you are in Bitcoin for the next few years, this is surely just noise. Hang on tight.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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