After Bitcoin’s 13% recovery over the last several days, many may be thinking that this is just a relief rally. Nevertheless, it can be argued that this is just the normal ebb and flow of the market, and that Bitcoin’s recovery is now on track. Higher prices may be on the horizon.
Bitcoin simply just overbought
The signs are that Bitcoin has turned the corner, and that the local bottom of $53,600 was probably definitive. Major selling seems to have tailed off, and even though $BTC is down 2.4% on Tuesday, this is just a normal small pull-back after a decent 20% recovery from that local bottom.
Some analysts are blaming the moving of large sums of Bitcoin between Mt. Gox wallets for Tuesday’s downturn, but in reality, the market already knows all about this, and probably the main reason for the pull-back is that Bitcoin was simply just overbought.
Can $63,000 become support?
Source: TradingView
Viewing the $BTC price on the 12-hour time frame, it can be observed that $BTC has settled beautifully on top of the $63,000 price level, although it remains to be seen whether this will hold, and if this can now become support.
All the short-term stochastic RSIs were at the top on Tuesday, indicating that momentum was about to change to the downside, leading to Wednesday’s pull-back. It could still take a while for these short-term momentum indicators to reset, but while this is happening, the $BTC price could form a small bull flag, which can propel the price back to the top of the range at $71,000.
Two massively bullish signs for Bitcoin
Source: TradingView
Zooming out into the weekly time frame, one can see how important it is that $BTC holds $63,000 as support. That said, coming back to retest $61,000 wouldn’t be the end of the world.
The two really bullish signs on the macro front are the huge bull flag, and the potential crossing up over the 20 level of the stochastic RSI. If the stochastic RSI provides the momentum, and the price can break out of the bull flag, a conservative target of $89,000 could be reached.
If the bull flag pole is taken from the support all the way back at $25,000, the measured move for this would be $102,000. Either way, much higher prices could be in store for Bitcoin. Watch this space.
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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