It’s an exciting day for the crypto-market as Bitcoin has soared unexpectedly through some key resistance level. Is this rally for real or is still the next peak before heading to new lows. Let’s discuss the possibilities.
On the hourly analog Bitcoin Bitfinex chart, we have had a beautiful extended rally today since around midnight EST last night where price began moving from the $7,750 level all the way up to $8,250 right now.
I had thought there would be a lot more resistance around the convergence of key levels at $7,850, however the volume last night picked up and blew right through there.
I mentioned that if it did make it through there we could see some additional resistance on the outside of the pitchfork at $8,126 and the top of the red channel 2 standard deviations from the median line, but even that level was breached by the bulls today and is now being used as support.
Price does breach the pitchfork from time to time and did on the downtrend pitchfork from May 5th to June 24 but eventually comes back into the pitchfork to consolidate the price action. This is most likely one of these instances, however it’s always possible that price jumps into a steeper up trending pitchfork if the momentum and volume continues.
Volume has fallen off over the last few hours here, and this $8,250 appears to be giving price some trouble. There is also some bearish reversal divergence on this time frame as indicated with the blue lines with price higher highs peak to peak and lower highs on the RSI.
A strong retest of this red long-term downtrend line at around $7,820 is needed to confirm if this rally is indeed real and has the power to keep going and I have adjusted the red target accordingly. Maybe that happens in the next 24 hours and we can reassess things then.
The MACD is beginning to downtrend bearishly over the last few hours here and the blue trigger line has crossed under the orange moving average there. The OBV is still holding up quite strong with lots more buy volume than sell volume. You can also use the OBV to look for divergences, but there’s not much to see yet.
On the daily analog Bitcoin Bitfinex chart, it’s amazing to see price blow through that red long term down-trending line, but we need to be careful of a bull trap here. Today does have the largest daily volume since June 10th’s smash, however today is not over yet and hopefully we will see more volume than April 25th the next highest level.
Volume is always a great indicator of further price movement, so we need to keep a close eye on whether this is just a nice rally or the beginning of the next bull run.
If I map an inverse Fibonacci retracement on the downtrend from May 6th to June 24th you can see that price has now rallied back up to the green .618 horizontal level almost precisely at $8,373. This is a natural level for the bears to defend, however price could run higher to the continued flavor of the quarter of the blue .786 level at $9,084.
I think the most likely scenario is that price consolidates around the current level of $8,250 for a few days, prices than retraces to the long-term downtrend line to retest it around $7,500 to $7,300 around the median of the pitchfork and previous horizontal resistance and then potentially heads higher. This entire downtrend has been very similar to an Accumulation Wyckoff Event which is worth taking a look at if interested.
The RSI looks very overbought right now at 76.58, but could easily continue higher if the bears don’t pull it together soon. The MACD still looks good with both lines and the histogram trending higher and the OBV looking very strong as well.
I have also added one more look where you can see price on the logarithmic chart, where price is still finding resistance within the pitchfork and at the blue down-trending line. Another key level and perspective to keep in mind.
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