Bitcoin Tires at $10K, Sidelined Investors Offered Entry
After hitting highs, Bitcoin takes a short pause.
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Bitcoin surged to just under $10,200 over the weekend, but this resistance level appears to be significant enough to trigger a correction.
Bitcoin’s Uptrend Shows Signs of Exhaustion
Since the beginning of the year, the flagship cryptocurrency entered a bull rally that has seen its price increase by nearly 50%.
Bitcoin went from trading at a low of $6,900 on Jan. 3, to recently hitting a high of $10,187. The upswing allowed BTC to reach a downward trendline that has been containing it from a further advance since late 2017.
According to Tone Vays, a former Wall Street trader and vice president at JP Morgan Chase, this is a major resistance cluster that could determine the fate of Bitcoin.
“On a short-term angle, Bitcoin has gone up too far and too fast, which leads me to believe that it needs a pull back. However, if BTC moves above this resistance cluster, it will turn bullish from a long-term perspective,” said Vays.
Due to the importance of this trendline, it is very likely that Bitcoin will retrace from the current price levels to let sideliners back into the market. At the time of writing, BTC is trading at $9,860, but the retracement mentioned above may see it drop further down.
A new inflow of capital could trigger another upswing, however, that allows the pioneer cryptocurrency to finally break above the multi-year trendline at $10,200.
Adding credence to the idea of a correction, multiple sell signals developed on BTC’s 12-hour chart. These bearish formations were given in the form of a green nine candlestick and an aggressive 13 candle by the TD sequential indicator in combination with a hanging man candlestick pattern.
If validated, Bitcoin could be bound for a one to four candlestick correction or a new downward countdown before the continuation of its bullish trend.
Based on the Fibonacci retracement indicator, Bitcoin could find support around $9,400. This is where the 78.6% Fibonacci retracement level sits. However, breaking below this support level would likely trigger an increase in the selling pressure behind the flagship cryptocurrency.
Such a bearish impulse could take BTC down to the 61.8% or 50% Fibonacci retracement level. These support barriers currently sit at $8,770 and $8,300.
It is worth noting that demand for Bitcoin has been growing substantially since mid-December 2019.
Since then, new BTC addresses are being created at an exponential rate and there has been a spike in Google searches for the keyword “Bitcoin halving.” Due to the high levels of interest among investors in the flagship cryptocurrency, the bullish outlook cannot be voided.
Therefore, if Bitcoin is able to close above the recent high of $10,187, investors could enter a FOMO (fear-of-missing-out) stage since the downward trendline previously mentioned will have been broken.
If that happens, BTC would likely surge to the next level of resistance around $11,200.