Bitcoin enjoyed a sharp pop higher, enough to lead to a break above the descending trend line on its 4-hour chart. Price made a strong rally but is encountering resistance at the top of the falling channel seen on the same time frame.
The 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the downtrend is more likely to resume than to reverse. Then again, price is trading above both moving averages to signal that bullish momentum is picking up. The gap between the moving averages is narrowing also, so a bullish crossover might follow.
If so, price could break past the channel top around the $3,700 mark and carry on with its climb. The current consolidation appears as a flag pattern, which is often seen as a continuation signal.
However, RSI is turning lower from the overbought zone to indicate that buyers are tired and letting sellers take over. This could lead to a pullback to the broken short-term trend line resistance or all the way down to the bottom of the channel at $3,300. Stochastic is also turning lower so price might follow suit as sellers take the upper hand.
Bitcoin’s strong rally is seen to have been spurred by a combination of low volumes and a few positive updates. This has prompted several analysts to renew their bullish forecasts and some even to switch from a bearish to a slightly more upbeat view.
Tom Lee of Fundstrat cites that technical analysts that were bearish in early-2019 are becoming “incrementally bullish” on BTC. This follows a claim by another analyst who said that he wouldn’t be surprised if Bitcoin surged to $5,000 in the next ten days. Mitoshi Kaku, a popular cryptocurrency trader on Twitter, posted:
“I wouldn’t be surprise at ALL, if the price goes straight to $5K in the next 10 days. The conditions are present TA-wise. Obviously that sort of move would need a strong catalyzer, but anything is possible when it comes to price action.”