After breaking out yesterday, Bitcoin (BTC) has engaged its first resistance target and almost penetrated it fully. But buy support does not seem exuberantly strong, and on very LTF charts we are seeing bearish signs on the indicators.
We see that Bitcoin is within its second leg of this breakout, and potentially the third of this LTF uptrend.
On the hourly chart, we already see possible signs of weakness. The RSI is putting in a slight bearish divergence here, although the 2-hour chart (not shown) does not repeat this reading. The histogram is losing momentum as well, and the volume seems to have faded on this second leg.
On the daily chart, we see that Bitcoin has successfully penetrated the entire first resistance zone. But it is perhaps too early to say that this has flipped support, and we would like to see a close above this level for confirmation. The 21 EMA is also looming just here; and if Bitcoin were to close above the 21, we could consider it a healthy sign that this local uptrend will continue tomorrow.
The indicator picture is mixed: the RSI does not really look like a full bottom has been put in; however, the histogram is continuing its very solid progression up without a hitch so far, so we could see momentum carry this movement up to $8,000.
Ultimately, we must remember that there are likely a high amount of underwater investors and traders, who may take any pump as a chance to lighten their losses. We should also keep in mind the larger economic consequences of the COVID-19 pandemic. It seems unlikely that any uptrend can continue for too long in this situation.
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