Bitcoin Price Building Relief Rally, But Resistance Hurdles Await

Omkar Godbole
Jun 26, 2018 at 10:00 UTC
Updated Jun 26, 2018 at 13:12 UTC
markets

Bitcoin (BTC) narrowly missed scaling a key resistance level on Monday, but remains on the hunt for a corrective rally, the technical studies indicate.

The cryptocurrency flashed signs of bearish exhaustion yesterday, having defended the $6,000 mark over the weekend. As discussed, a close (as per UTC) above $6,250 (Doji candle high) yesterday would have likely set the tone for a stronger corrective rally.

While prices did reach a high of $6,341 yesterday, BTC closed (as per UTC) at $6,247. So, technically speaking, the short-term bull doji reversal is yet to be confirmed.

However, a rally may still be on the cards, as prices are holding well above the key support of $6,000 (February low) and the indicators have diverged in favor of the bulls.

On the other hand, stiff resistance lined up in the $6,400–$6,800 range could complicate the recovery.

At press time, BTC is trading at $6,220 on Bitfinex, having clocked a high of $6,281 earlier today.

Daily chart

Although BTC failed to close above $6,250 yesterday, the green candle has established a bullish price-relative strength index (RSI) divergence (lower lows in price and higher lows in the RSI).

Meanwhile, the money flow index (MFI) – a momentum indicator that incorporates both price and volume into its calculations – has also created a higher low as opposed to lower lows in price (bullish divergence). The MFI is rising too, indicating an increase in buying pressure.

Clearly, the indicators are aligned in favor of a corrective rally in the short-term. That said, the bulls face an uphill task as a number of key resistance hurdles await:

  • $6,417 (10-day moving average)
  • $6,425 (April low)
  • $6,500 (April 6 low)
  • $6,533 (March 30 low)
  • $6,680 (falling channel resistance)

Still, the longer outlook remains bearish, with bitcoin still trading in a falling channel.

Below $6,000 (February low), major support levels are located at:

  • $5,755 (Sunday’s Doji candle low)
  • $5,400 (November low)
  • $5,090 (rising wedge breakdown target)

So, there is a lot of room to the downside and plenty resistance to the upside, and the bulls’ task doesn’t look an easy one.

View

BTC remains on the hunt for a corrective rally to $6,680 (falling channel hurdle). A daily close (as per UTC) above that level would confirm a short-term bearish-to-bullish trend change and would open the doors to the 50-day moving average, currently located at $7,464.

On the downside, a close below $6,000 (February low) would put the focus back on the long-term bearish technicals and boost odds of a drop toward $5,40 (November low).

Hurdles 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.