Bitcoin’s (BTC) price has breached $6,000 in the early hours of May 9 (UTC), following several dogged attempts to get above the key level. The rally ended at exactly $6,100 on some exchanges (Bitstamp pictured below).
A light support/resistance zone has formed around $5,960 is being tested at time of writing. The local uptrend and a couple of additional S/R areas lie just below, with $5,600 being the local bottom.
Although it is anybody’s guess whether or not the price rises can continue, one thing is certain: Bitcoin has finally and well entered a knot of serious resistance based on historical price action.
Whether or not Bitcoin’s rocket ship continues for a while longer, it does seem virtually impossible that this resistance will be completely broken now (say, somewhere above $6,500) without some cooling-off.
Looking at some high time frame (HTF) charts – below the daily – we can see indicators suggesting that Bitcoin is getting overheated. Falling strength on the Relative Strength Index (RSI) may point to a coming correction; overall trading volume, however, has remained pretty strong and even growing since the April 2 pump that altered the course of Bitcoin. (Chart below again depicts Coinbase, a good representative of genuine trading volume.)
This is to say that it is nowhere guaranteed that price has topped off, even in the short or medium term (the long term trend is almost certainly bullish now!).
If we take a moment to concentrate on a very HTF chart – below the weekly – we can see that Bitcoin’s RSI has broken clean through a critical resistance zone, which has a history all the way back to 2015(!).
If Bitcoin were to correct here, we might easily expect a successful retest at around 52 on the RSI. Bitcoin had been stuck under this level for about a year and four months – now with the resistance cleanly broken, we may expect it to serve as new support.
No matter what happens, it now seems inconceivable that Bitcoin’s 2018 bear market is not definitively over – although nothing is impossible.
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