3/ If bulls are able to push past $4500, $4800 is the last bump in resistance that stands in the way before $5400. At this time I am not anticipating a rally beyond ~$5500, nor can I guarantee more relief even past $4500, though we must not count any scenario out.
Bitcoin Rally Shouldn’t Excite the Bulls Yet, Trend Still Bearish
The Bitcoin price appears to have bottomed out near the $3,000-level after falling more than 80% this year. The digital currency at press time is trading above $4,000, up over 30% within just a week. It is clear that traders interested in the long-term aspect of Bitcoin have bought the dip. As a result, in the last five days, Bitcoin is creating new higher highs with volume increasing on each subsequent leg.
Nevertheless, if one tries to look the empty side of the glass, the current rally looks repetitive as well. A zoomed-out version of the Coinbase BTC/USD chart explains it clearly. During the June-July trading sessions, the pair while pursuing a giant downtrend sentiment has noted a rebound of almost $2,713. It eventually found the bullish sentiment dying at a monthly peak level of $8,475. The market later crashed back to near $6,000, once a popular bottom area, from where it rebounded once again and recovered towards $7,417. The price fell again towards $6,000 and eventually crashed further in the wake of the November bearish sentiment.
According to the current scenario, $3,000 looks like a new $6,000. The level could stay firm against each downtrend action, bringing attractive intraday profits to retail traders. The current uptrend might even scale further to establish new higher highs, but its potential to sustain itself remains doubtful.
Coming from a pure psychologically-induced perspective, Bitcoin is looking at $4,500 as a potential resistance level, crossing which could maintain the digital currency’s interim bullish bias. Then again, there are more hurdles on the way – at $5,000, $5,400 and at last near $6,000, the bottom that sustained the long during the 2018’s bearish action.
In a way, to really come out of the negative stigma, Bitcoin should be able to form a giant inverse head and shoulder pattern with its neckline close to $5,800 and breakout target at $6,000. Anywhere below the said levels, the digital currency will remain in a giant, long-term bearish bias.
While the upside targets are out of bound, it is the downside levels that could maintain a long-term bullish perspective for bitcoin. It is all about levels guarding the forts against bears. Any invasion beyond these levels means too many things for the entire industry. First, mining bitcoin becomes unattractive to miners at a lower cost. And second, it detracts merely significant monies from trusting the space that otherwise would line up with their investments.
As explained above, $3,000 is appearing to be a bottom already, but its sustenance is still not confirmed. Perhaps, a double bottom formation would be able to shed more light on its potential endurance. Otherwise, mainstream analysts have already called $1,500 a possible long-term bottom.
4/ A break above $5650 and it is all but sure that we see another leg up to the low $6000s. It is highly unlikely we cross that barrier any time soon.
Below us we look to $3700 and $3400 as intermediate supports, as well as the range low near $3100.
Bottom line is, investors could get excited by a too-sudden bitcoin rally but the real catalysts that could promise an extended bullish momentum are the possible launch of VanEck, Fidelity and Bakkt crypto products. Until then, crypto remains in a strong bearish market.
Bear image via Shutterstock.