New Resistance Could Cap Bitcoin’s Upside Price Potential

Omkar Godbole
Jun 21, 2018 at 10:01 UTC
Updated Jun 22, 2018 at 08:12 UTC
markets

Bitcoin’s (BTC) bulls are struggling to push prices higher, despite a still-favorable short-term set-up on the technical charts.

Bitcoin rose to a six-day high of $6,580 on Monday on Bitfinex, adding credence to indications that the cryptocurrency could be in for a relief rally.

The bullish bias has strengthened further in the last two days too, courtesy of a bullish Bollinger band breakout and a bullish crossover between the 5-day and 10-day moving average (MA). Furthermore, bitcoin refused to embrace the negative narrative on Wednesday after the $31 million hack of South Korea’s Bithumb exchange, indicating that the sellers are likely running dry.

Despite all this, though, the cryptocurrency has struggled to find acceptance above $6,800 in the last 72 hours, as seen in the chart below.

Daily chart

Bitcoin printed intraday highs above $6,800 in the last three trading days (as per UTC), but still closed well below the $6,800 mark.

The repeated failure to scale $6,800 in a convincing manner forces us to consider the possibility of the bears making a comeback, although the charts do not see that happening while BTC is holding above $6,550.

At press time, BTC is changing hands at $6,730 on Bitfinex.

4-hour chart

The chart shows BTC has created a rising wedge –  a bearish continuation pattern. A break below $6,550 (rising wedge support and 50MA support) would put the bears back in the driver’s seat and allow a drop to $6,000.

A drop below $6,550 would also push the relative strength index (RSI) below the ascending trendline, further strengthening the bear case.

View

  • The immediate outlook remains bullish as long as bitcoin is holding above $6,550.
  • On the higher side, stiff resistance is noted at $6,943 (100-candle MA on 4-hour chart) and $7,000 (psychological hurdle).
  • A downside break of the rising wedge pattern (below $6,550) would open the doors to $6,000.
  • A daily close (as per UTC) below $6,000 would expose the next major psychological support of $5,000.

Bitcoin image via Shutterstock

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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.