Bitcoin (BTC) Technical Analysis: Read This Before Jumping on the Hype Train
Q4 fever is setting in across the crypto community as BTC cruises past $6,500, short trades on the futures market slump to a three-month low and Mike Novogratz predicts a bullish end to the year. Chart indicators also appear to be hinting at a likely continuation, after a wave of new investment at the start of the month carried BTC off its $6,320 support. Since then, buying momentum has been consistently strong for the asset as bullish sentiment returns to the BTC market.
Only one thing stands between Bitcoin and the moon right now, and that’s the $6,800 resistance. So far this critical level has rejected four breakout attempts that launched from the $6,320 support and will add significant pressure on the bulls as they edge closer toward the price point. If candles are able to close above this resistance, however, and indicators continue to look strong thereafter, then we should start to get excited about a new bull market.
What The Chart Indicators Say
Looking at a number of indicators on the 1D BTC/USD chart, we can see why so many people are rallying in anticipation of a Bitcoin boom;
-The RSI has been climbing consistently through the week and showing no sign of bearishly diverging.
-The 12MA on the MACD is looking likely to break through the signal line soon if current momentum levels can sustain.
-The Chaikin Money Flow indicator line is also gunning toward the zero line as buying pressure increases.
However, it’s worth noting that we’re yet to see a convergence between the 13 EMA and 34 EMA, we still have a very bearish T/K divergence on the Ichimoku indicator, and we also still have signal dots above the price action on the Parabolic SAR.
The $6,800 Resistance
This kryptonite level for Bitcoin at $6,800 is not only a solid resistance as previously mentioned, but also a terrible support level. During the last two strong bear markets, in July and September, after Bitcoin had managed to close above the $6,800 level, we can see that the level provided no support at all for the asset as it made its way back down to the lower support region (top green box).
This is an additional concern for bullish traders, as they may not be able to rely on the $6,800 to fall back on if they’re able to break over it. This means that once the line has been overcome, support will need to continue driving BTC upward until it can establish a new support; which in this case would likely be around the $7,000 level.
While bullish momentum has been clearly building behind Bitcoin this week, other chart indicators suggest that bears still remain in control over the market. In the absence of any significant news, ie. an approved Bitcoin ETF, it is likely that Bitcoin will continue to oscillate sideways as previously mentioned in the last Bitcoin TA, between the $6,800 and $6,320 support below.
If the FOMO-train does manage to drive BTC over the $6,800 in the short-term, however, then we would like to see the asset peak over $7,000 to provide bulls with a level to rest along before attempting the next big resistance at $7,400.