Bitcoin’s remarkable rally has the cryptocurrency community buzzing as it nears the previous all-time high (ATH) of approximately $68,900. A technical analysis of the daily and weekly charts reveals a sustained upward trend that invites optimism for continued bullish momentum.
The daily chart showcases Bitcoin’s substantial break above both the 50-day Simple Moving Average (SMA) at around $49,586 and the 200-day SMA at approximately $38,242, an encouraging sign for bulls. The volume profile also supports the bullish narrative with a consistent influx of trades, adding to the upward pressure.
Looking at the weekly chart, we see Bitcoin testing around its previous ATH. The Relative Strength Index (RSI), currently above 87, indicates strong momentum but also suggests caution as it flirts with overbought conditions.
Potential Trades:
- Bullish Continuation Trade: If Bitcoin sustains above the previous ATH and does not show signs of reversal, a trader might consider a long position with a target set at a new potential high. The exact target would be speculative, but Fibonacci extensions or psychological levels (e.g., $70,000) could be used. A stop-loss should be placed below the breakout level to manage risk.
- Reversal Trade: Given the overbought RSI, if Bitcoin shows signs of reversal with bearish candlestick formations, a trader might take a short position targeting the next significant support level, which could be around the $50,000 mark but unlikely at this time. The stop-loss for this trade should be just above the ATH to protect against a false reversal signal.
Overall Rating: Cautiously Bullish. The break at the previous ATH could indicate continued bullish sentiment, but the overbought RSI warrants caution as it could precede a pullback. Traders should be prepared for volatility and have clear stop-loss orders to protect capital. It is also recommended to watch for consolidation or continuation patterns to form before taking a position to increase the probability of a successful trade.
