Bitcoin (BTC) has been bouncing for the past day or two, and is now pressuring the local “border” marked out by the October low. Breaking this level could lead to a more extended bounce, albeit still amid a larger downtrend that has taken hold.
Starting on a detailed 1-hour view, we see an erratic dump-into-fakeout-pump has propelled the leading crypto back into this resistance area, which is keeping Bitcoin out of the previous market structure. Plenty of volume has come in during this movement, which came a few hours ago, and we could see Bitcoin break this level for more upside.
The histogram is here has crossed to the positive side, although its profile is not perfectly clear – and in any case, histogram movements on the hourly are often erratic and unreliable.
If we do see Bitcoin break this level, we are likely to see stiff resistance and selling at $8,000. This zone marks a previous support area, and also the exact 0.382 level on the Fibonacci retracement scale. The 4-hour RSI is already breaking far away from its uptrend, and may be getting overheated. The histogram has turned up once again on this timeframe, and a close in this profile would look like growing uptrending momentum.
Volume is doing well so far on this candle, and could overtake the previous one at this rate.
Finally, on the daily chart, we are reminded to temper any bullish expectations. The red band starting just at $7,400 marks previous support from earlier this year, and will form another resistance band here. Price here has already been in contact, possibly rejected, by the 8 EMA, and we must bear in mind that Bitcoin is very much in a downtrend until proven otherwise.
The RSI has reset itself somewhat from oversold conditions, which may mean it is ready for yet more downside. The histogram has taken a nice tack up, however, but remains pretty deep in the negative side of the range.
Bitcoin’s bounce looks fairly likely to continue, but we should keep in mind the layers of resistance it’s up against. And if it does continue, we need to remember the larger downtrend that has been in play since mid-2019 – and that was powerfully blocked from reversing in the last few weeks.
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