Bitcoin was previously trending inside a descending channel on the 1-hour time frame but price has since busted past the top at $8200 to show that a reversal is about to happen. Price is also moving above a short-term rising trend line and a quick pullback seems possible.
This could take price for a retest of the broken channel resistance before gaining more traction on its climb. This is also close to the moving averages dynamic inflection points, which might now hold as support from here.
Speaking of moving averages, the 100 SMA is still below the longer-term 200 SMA to signal that the path of least resistance is to the downside. Then again, the gap between the two is narrowing to form a potential upward crossover. In that case, bullish momentum could return and sustain the climb.
RSI is turning lower from the overbought level to signal a return in selling pressure. This could keep the correction going until the areas of interest around $8000-8300 or until the oscillator hits oversold levels and turns back up.
Similarly, stochastic is heading south from the overbought region so bitcoin could follow suit. Buying pressure could return once it dips into the oversold territory.
Market watchers are paying particularly close attention to energy issues involved in mining bitcoin as a potential deterrent for the cryptocurrency to be used in the mainstream. To top it off, Fundstrat’s Lee admitted that he may have been too bullish about bitcoin, although he still expects it to reach $25,000 by the end of this year.
To be specific, Lee cited that the cryptocurrency market still “faces significant internal resistance and hurdles within traditional financial institutions” and that his Consensus forecast was based mostly on the community coming together in a “centralized place” as well as the “growth in attendance” during the conference.