$7K Resistance Is Capping Bitcoin's Upside Price Potential
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
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
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.Road barrier image via Shutterstock