Overbought? Bitcoin Eyes $12k, But Correction Possible

Bitcoin may soon move to fresh all-time highs above $12,000, but there are still signs of a possible correction ahead.

AccessTimeIconDec 5, 2017 at 12:30 p.m. UTC
Updated Sep 14, 2021 at 1:55 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Bitcoin may soon move to fresh all-time highs above $12,000, but signs of trader fatigue are still evident, price chart analysis suggests.

Prices of the cryptocurrency have already neared Sunday's record high of $11,831 this morning, reaching $11,793 at around 08:00 UTC, as per CoinDesk's Bitcoin Price Index (BPI). At time of writing, bitcoin has dropped back a little to $11,649.

Looking at CoinMarketCap data, bitcoin (BTC) has gained 4.18 percent in the last 24 hours, and 18% over the last 7 days.

Importantly, the bulls scored a brownie point yesterday by ensuring that bitcoin closed (as per UTC) above last week's highs near $11,500. While prices did hit the new high of $11,831 Sunday, the day's close was below previous record highs – a sign of bull market exhaustion.

Bitcoin chart

download-43

A close above last week's high (doji candle/previous record high) indicates a continuation of the rally, indicating that bitcoin may hit fresh record highs above $12,000 in the next 24–48 hours.

Still, the odds of a pullback remain high, with the daily relative strength index (RSI) showing overbought conditions (above 70.00) for the 10th consecutive day.

4-hour chart

bc-4-hour

The above chart shows:

  • Potential double top reversal with neckline level of $10,950.
  • Of late, volumes have remained low during the rally, while bouts of sell-off have been accompanied by a big jump in volumes (marked by circles). A high volume retreat in prices indicates potential for a correction.
  • Although bitcoin's price is forming higher lows, the RSI is losing altitude, also indicating scope for a pullback.

Formed at the top of the bull market, a double top is a bearish reversal pattern comprising two consecutive peaks that are roughly equal, with a moderate trough in-between.

A break below the neckline support ($10,950) confirms a bearish reversal. If the 4-hour candle closes below $10,950, prices may fall back to $10,100 (target as per the measured-height method).

View

Bitcoin could set fresh record highs above $12,000, as imminent BTC futures listings from CME and the CBOE are seen as opening doors for institutional investors.

However, chart studies still suggest that a healthy pullback to $10,000 is possible.

However, only an end of the day close below $10,000 (rising trendline support on the 4-hour chart) would indicate a temporary top has been made. In that scenario, prices could then test $8900-8,600 levels.

Climber on peak image via Shutterstock

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.