Bitcoin (BTC) Price Analysis: Another Breakout To Look Out For
Bitcoin has also formed a triangle chart pattern which might show an earlier breakout as a preview for its reversal formation. Price has bounced off the triangle bottom and might be due for a test of resistance at the $4,200 mark next.
The 100 SMA is above the longer-term 200 SMA to signal that the path of least resistance is to the upside. This suggests that the climb is more likely to gain traction than to reverse. Price is also trading above both moving averages, which suggests that these could keep holding as dynamic support near the triangle bottom.
However, RSI is hitting the overbought zone to suggest that buyers might be tired and willing to let sellers take over. Stochastic is pointing up but also dipping into the overbought region to signal exhaustion. Turning lower could mean a pickup in selling pressure that could force a break of the triangle support around $3,900.
Still, the fact that bitcoin is closing above $4,000 yet again could be enough to draw buyers back in. Recall that there’s a long-term inverse head and shoulders forming also, and a neckline break past $4,400 could lead to a rally of the same height.
Optimism for institutional investment is what’s mostly keeping bitcoin afloat so far this year, although traders still need to see more evidence of this actually affecting volumes and activity. Upbeat forecasts for the industry and prices are also encouraging bulls, but it would soon take actual developments to sustain any gains.
On the flip side, concerns about regulation and taxation have been downers for price action in the previous year, along with the usual slew of security threats and uncertainty surrounding mining wars. Now that the latter has been resolved, though, traders can turn more attention to progress in the space and how authorities are working their way around issues.