Bitcoin could be in for a weekend of sideways trading, price action analysis suggests.
Despite the high volume retreat from a record price above $11,300, the world’s largest cryptocurrency by market capitalization has been able to avoid a break below the $9,000 mark.
The cryptocurrency was last seen trading at $10,040. As per CoinMarketCap, bitcoin (BTC) is trading unchanged on the day.
Comments on social media indicate the investor community feels bitcoin may have topped out above $11,000 for now and a healthy correction would shake out the weak hands, thereby opening doors for a more sustained rally to new record highs.
That said, the price chart analysis seems to suggest a consolidation is more likely to be the name of the game in the short-run.
The above chart shows:
- The follow-through to bearish doji reversal has been weak (bears have not been able to cut through the doji low of the big red candle sitting next to doji).
- The rising trend line is intact, and the 50-moving average (MA), 100-MA, and 200-MA are sloping upwards in favor of the bulls.
- Volumes have dropped (as shown by the falling trend line on volume bars), indicating the pullback is nothing more than a healthy correction.
- The relative strength index (RSI) is bottoming out.
All considered, odds are high that bitcoin holds around $10,000.
However, that does not necessarily mean fresh record highs are in the offing today. The daily chart shows strong signs of bull market exhaustion or indecision at record highs.
The above chart shows:
- Two consecutive doji candles, which indicate indecision in the marketplace.
- The RSI shows overbought conditions.
- A consolidation around $10,000 (+$1,000/-$1,000) is likely over the next 24 to 36 hours.
- Bullish scenario – Consolidation around $10,000 for the next 24 to 36 hours, followed by 1-hour close above $10,850 on the back of stronger volumes would open doors for a rally to fresh record highs.
- Bearish scenario – A close below the rising trend line could yield a deeper sell-off to $7,800, although the upward sloping 10-day MA indicates the dip could be short-lived.
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.