Bitcoin has once again breached the $9,000 range and has continued out of the months long down trend. However, there are still some warning signs we should be aware of here.
On the bullish side, trading veteran Peter Brandt has said that Bitcoin could surge to $21,400.
Brandt believes that such a bullish scenario is possible if the upper boundary of a descending parallel channel, the 18-day moving average, and the 3-day trailing stop rule are able to hold. However, if these support levels break, then Brandt expects that a “more serious correction” could take place.
Below we will take a look at the charts and see what information they give us.
On our daily chart, we can see that on January 24th we had a clean bounce off of the 200 EMA which is a good sign.
Since then we have had a nice little pump that has pushed the price up into the current range of the $9,300 region. Despite the pump, we have yet to create a new lower-high on the daily chart. To do this, we must break $9,555.
It’s worth noting that an increase in demand for the cryptocurrency could jeopardize the bearish outlook.
If Bitcoin is able to close above the recent high of $9,170, then it could continue climbing up to reach the next level of resistance which would be $9,555. The last lower-high given in the bear trend.
After that we could look for resistance given by the 127.2 percent Fibonacci retracement level. This resistance level sits at $9,800.
Here on our daily rsi, we can see a clear trend upwards which is indicated by the yellow diagonal line.
The yellow horizontal line is looking for signs of bearish divergence which we have not yet seen. Be on the lookout for a bearish RSI divergence as a possible indicator for a price correction.
The RSI is currently pointing towards the upside, but I am personally looking for it to potentially start to tire out in the next day or two.
Our MACD indicator is still showing bullish. However, it is on its way down. Also watch for signs of bearish divergence here as well.
Overall, I am still quite bullish. But, I will be looking for a pullback before I enter into a new position. I took profits on my last position at around the $9,250 area.
Keep in mind that we also have 2 CME gaps below. I didn’t look up the exact price of those gaps, but they are in the 8800-8900 range and the other I believe is in the 8500-8550 range. Bitcoin has historically filled it’s gaps more than 90% of the time.
If Bitcoin is bound for a pullback, it could look for support around the 78.6 Fibonacci retracement level that sits at $8,700. Breaking below this barrier could push the price of BTC further down to the 61.8 percent Fibonacci retracement level at $8,300. This would fill both CME gaps as well (note: we do have a CME gap above as well that has gone unfilled since near the beginning of the long bear market).