Bitcoin Price Building Relief Rally, But Resistance Hurdles Await
Bitcoin (BTC) narrowly missed scaling a key resistance level on Monday, but remains on the hunt for a corrective rally, the technical studies indicate.
The cryptocurrency flashed signs of bearish exhaustion yesterday, having defended the $6,000 mark over the weekend. As discussed, a close (as per UTC) above $6,250 (Doji candle high) yesterday would have likely set the tone for a stronger corrective rally.
While prices did reach a high of $6,341 yesterday, BTC closed (as per UTC) at $6,247. So, technically speaking, the short-term bull doji reversal is yet to be confirmed.
However, a rally may still be on the cards, as prices are holding well above the key support of $6,000 (February low) and the indicators have diverged in favor of the bulls.
On the other hand, stiff resistance lined up in the $6,400–$6,800 range could complicate the recovery.
At press time, BTC is trading at $6,220 on Bitfinex, having clocked a high of $6,281 earlier today.
Daily chart
Although BTC failed to close above $6,250 yesterday, the green candle has established a bullish price-relative strength index (RSI) divergence (lower lows in price and higher lows in the RSI).
Meanwhile, the money flow index (MFI) – a momentum indicator that incorporates both price and volume into its calculations – has also created a higher low as opposed to lower lows in price (bullish divergence). The MFI is rising too, indicating an increase in buying pressure.
Clearly, the indicators are aligned in favor of a corrective rally in the short-term. That said, the bulls face an uphill task as a number of key resistance hurdles await:
$6,417 (10-day moving average) $6,425 (April low) $6,500 (April 6 low) $6,533 (March 30 low) $6,680 (falling channel resistance)Still, the longer outlook remains bearish, with bitcoin still trading in a falling channel.
Below $6,000 (February low), major support levels are located at:
$5,755 (Sunday's Doji candle low) $5,400 (November low) $5,090 (rising wedge breakdown target)So, there is a lot of room to the downside and plenty resistance to the upside, and the bulls' task doesn't look an easy one.
ViewBTC remains on the hunt for a corrective rally to $6,680 (falling channel hurdle). A daily close (as per UTC) above that level would confirm a short-term bearish-to-bullish trend change and would open the doors to the 50-day moving average, currently located at $7,464.
On the downside, a close below $6,000 (February low) would put the focus back on the long-term bearish technicals and boost odds of a drop toward $5,40 (November low).
Hurdles image via Shutterstock