Make-or-Break Level? Bitcoin Pauses at Key Resistance
Bitcoin’s price is flirting with key resistance on the technical charts and could either break higher towards $17,000 or dip once more below the $10,000 mark.
Having clocked a high of $11,599 earlier today, bitcoin is now trading at $11,473, according to CoinDesk’s Bitcoin Price Index (BPI). While the cryptocurrency has spent the better part of the last 42 hours above $11,000, a convincing break above the key resistance level of $11,600 (inverse head-and-shoulders neckline) has remained elusive amid lighter trading volumes.
Twenty four-hour trading volume stands at $6.17 billion today, compared to $7.28 billion seen a week ago. And, notably, although BTC has appreciated by more than 20 percent since the Feb. 25 low of $9,304, volume has hardly increased over the same period.
Sluggish trading volume could be a cause for concern, although an argument could be made that the market has merely normalized as the market euphoria seen in December and early January has faded.
Still, volumes may rise sharply if bitcoin sees a convincing break above the key resistance.
The above chart (prices as per Bitfinex) shows:
- BTC closed yesterday (as per UTC) above the descending trendline (white dotted line) resistance and $11,306 (38.2 percent Fibonacci retracement of the sell-off from the Dec. 17 high and Jan. 6 high), signaling a bullish breakout.
- However, the inverse head-and-shoulders neckline resistance at $11,600 is proving a tough nut to crack. Prices did clock a high of $11,623, but quickly fell back below $11,500
- The 5-day moving average (MA) and the 10-day MA are trending northwards, indicating a short-term bullish setup, while the 50-day MA continues to slope downwards in favor of the bears.
- BTC exited the ascending trendline yesterday and has not been able to hold above the neckline resistance today, so the cryptocurrency looks quite heavy.
- The RSI is creating a head-and-shoulders-like pattern. Hence, the bulls need to cut through the neckline resistance soon or prices could drop below $11,050 (previous day’s low), pushing RSI below the head-and-shoulders neckline support (and into bearish territory).
- A high volume breakout (daily close as per UTC) above $11,600 would open the doors to stronger gains towards $17,000 (inverse head-and-shoulders target as per the measured height method). On the way higher, the pair may face resistance at $14,584 (61.8 percent Fibonacci retracement).
- On the downside, a move below $11,050 (previous day’s low, strong support as per the 4-hour chart) would abort the immediate bullish outlook and could yield a drop below the $10,000 mark.
- In that case, the dip could be short-lived as the 5-day MA and 10-day MA are sloping upwards.
- Bearish scenario: Failure to take out the inverse head-and-shoulders neckline hurdle in the next 48 hours followed by a break below the descending 50-day MA ($10,240) would suggest the corrective rally from the Feb. 6 low of $6,000 has ended. Bitcoin prices could then proceed to revisit $7,960 (Feb. 2 low).
Fork in track image via Shutterstock
Source: Read Full Article