CoinDesk’s recent technical analysis predicts the momentum of bitcoin’s price rally could wane soon.
Bitcoin price posts a two-month high
On the Bitfinex exchange early today the price of BTC rose to $8,130 as it witnessed an inverse head-and-shoulders breakout last week. The rally represents a 40 percent gain from the seven-month low of $5,755 last June 24. This has put the bulls in a commanding position for now.
While there could be further gains after a brief pause or pullback a key technical indicator is signaling that there are overbought conditions. At the time of the analysis being posted 12:03 UTC bitcoin was trading on Bitfinex at $8,100. However, it is far above that now.
CoinDesk Analysis
The relative strength index (RSI) a widely used momentum indicator rose above 70 the overbought zone and was when the article was written at 74.56. This is its highest level since last December. Thus BTC would be at its most overbought level since late last year.
The overbought situation may mean that bitcoin may find it difficult to rise and stay above the pennant resistance level of $8,140. There could be a minor pull back within the next few days.
However, a technical correction, if there is one, could be short as other signs are biased toward the bulls. Both the 5-day and 10-day moving average are tending upwards a bullish sign. Short term charts also indicate the price could very well rise even more.
In the 4-hour chart the broadening wedge breakout indicates the rally from the July 17 low of $6,740 could be continuing. Attention is now shifted to $8,676 the 200 day MA and a key resistance area.
CoinDesk’s outlook
Based on its technical analysis CoinDesk’s view is: ” BTC’s break above $8,000 has bolstered the already bullish technical setup, however, overbought conditions could cap the upside around $8,150 over the next few days. A pullback to ascending (bullish) 10-day MA, currently at $7,570 and seen sloping upwards to $7,700 in the next 48 hours, cannot be ruled out but will likely end up refueling the BTC freight train for a sustained move toward the 200-day MA of $8,676. Only a daily close (as per UTC) below $7,221 (July 21 low) would abort the bullish view.
Present situation
BTC’s price opened today at $7,717. It high was well over $8,000 at $8,342. The low was just $7,694. It is now Wednesday July 25th UTC. Bitcoin opened at $8,397 well above it opening yesterday. So far the high has been $8,479 and the low $8,301. At 04:41 UTC it was at $8,379.
No sign of the upside being capped at about $8,150 as the price has advanced considerably beyond this. However there is no sign either of the price breaching the key $8,676 level. However there are still over 19 hours left in the day. The present price of bitcoin can be found here. The appended video gives a more bullish analysis.
