New Resistance Could Cap Bitcoin's Upside Price Potential

Bitcoin's bulls are struggling to force a rally, despite a still-favorable short-term set-up on the technical charts.

Jun 21, 2018 at 10:01 a.m. UTC
Updated Sep 13, 2021 at 8:05 a.m. UTC

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

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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

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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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