Bitcoin's Price Rally Hits Speed Bump in Push to $7K

Bitcoin (BTC) needs to overcome a key technical resistance to keep the short-term bull market going, technical studies indicate.

The leading cryptocurrency rose to $6,785 on Bitfinex on Wednesday – the highest level since June 22 – and looked set to test the psychological hurdle of $7,000, as suggested by Monday’s bullish breakout.

However, the bulls failed to muster enough momentum to cross $6,754 (23.6 percent Fibonacci retracement of the drop from $9,990 to $5,755) on a daily closing basis (as per UTC), establishing the Fibonacci level as a stiff resistance.

Further, a detailed look at the technical charts reveals the area around $6,754 is packed with moving average lines and Bollinger Band, all working in unison to put brakes on BTC price rally.

Hence, a convincing break above the resistance needs to happen soon, else a price pullback could be in the offing. 

At press time, BTC is changing hands at $6,620 on Bitfinex.

4-hour chart

The above chart shows:

  • The upper Bollinger Band (standard deviation of +2,2 on 20-candle moving average) is located at $6,570, the 200-candle moving average (MA) is seen at $6,717, and the 23.6 percent Fibonacci retracement is located at $6,754.
  • Bollinger Bands are sloping upwards in favor of the bulls.
  • BTC is trading above 50-candle MA and 100-candle MA and both MAs are trending north (biased to the bulls).
  • The cryptocurrency has created a rising channel-like structure. (bullish setup).

Clearly, the odds are stacked in favor of a convincing move above the resistance zone of $6,717-$6,770. The bullish setup in the daily chart also favors a rally to $7,000.

However, if BTC fails to pick up a bid in the next few hours, the focus will likely shift to the bearish price-relative strength index (RSI) divergence seen in the 4-hour chart. In this case, the rising channel could be breached to the downside, triggering a deeper pullback in BTC prices. 

View

  • An aggressive move above the resistance zone of $6,717 – $6,770 would add credence to the bullish setup in the 4-hour and daily chart and would allow a rally to $7,000.
  • The focus would shift to the bearish RSI divergence (seen in the 4-hour chart) if BTC fails to cut through the resistance zone of $6,717-$6,770 in the next few hours. In this case, prices could fall back to $6,330 (50-candle MA on 4-hour chart).
  • A close below $6,275 (Monday’s low) would abort the bullish view.

Speed Bump via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Comments

comments

Filed in: Bitcoin Buzz Tags: ,

You might like:

R3's Hearn and Brown Say Enterprise Blockchain's Day of Reckoning Is Here R3's Hearn and Brown Say Enterprise Blockchain's Day of Reckoning Is Here
Commodity Traders, Major Banks Back New Blockchain Platform Commodity Traders, Major Banks Back New Blockchain Platform
3D Printed Gun Advocate Cody Wilson Charged With Child Sexual Assault 3D Printed Gun Advocate Cody Wilson Charged With Child Sexual Assault
Europol Warns of Crypto Hacks and Mining Malware in Latest Report Europol Warns of Crypto Hacks and Mining Malware in Latest Report
Bitcoin Core Developers Move to Fix Denial-of-Service Software Bug Bitcoin Core Developers Move to Fix Denial-of-Service Software Bug
Bitcoin's Price Swings to Nearly $6,500 in Volatile Trading Hour Bitcoin's Price Swings to Nearly $6,500 in Volatile Trading Hour
Coinbase Hires Fannie Mae Executive as Chief Legal Officer Coinbase Hires Fannie Mae Executive as Chief Legal Officer
Binance Reveals Plan to Launch Crypto Exchanges on Almost Every Continent Binance Reveals Plan to Launch Crypto Exchanges on Almost Every Continent
© 2018 Virtual Mining Bitcoin News. All rights reserved. XHTML / CSS Valid.