- The Bitcoin price briefly climbed to over $8,000 USD yesterday, but bounced off the important resistance.
- Various technical indicators show that the Bitcoin price has reached a critical level.
The Bitcoin bulls took control again yesterday evening (around 9pm UTC) and pushed the price up to 8,000 USD. Within four hours the BTC price rose from 7,545 USD to 8,006 USD. Bitcoin thus recorded a 30-day high and one of the largest intraday rallies in weeks. However, the momentum bounced off the important resistance zone of 8,000 USD. At the time of writing, the Bitcoin price consolidated at around USD 7,865.
Many analysts see enormously strong resistance in the range between USD 7,800 and USD 8,000. However, the latest price movement also signals that the recent low of USD 6,400 could mark a long-term bottom. As Big Cheds explained on Twitter, Bitcoin has formed an inverse head and shoulder formation and an EMA bull cross. Historically, the latter is an immensely bullish signal.
$BTC #Bitcoin Daily chart breaking out, flirting with an upcoming 8/34 EMA bull cross (green and yellow lines) https://t.co/WXm8cdym7y pic.twitter.com/WtagD3BIGt
— Cheds (Trading Quotes) (@BigCheds) January 6, 2020
However, in order for the inverse head and shoulder formation to be confirmed, it is imperative that Bitcoin trades above the USD 7,600 range in the coming hours, as a rejection could shift momentum back to the bears.
Is BTC facing a parabolic rise?
The rise has led some analysts to believe that BTC is on the verge of a parabolic rise. However, it is important to note that Bitcoin must first break permanently above two resistances, at around $8,000 and $10,000, before new all-time highs can be considered.
Positive for the current trend is that 91% (USD 316 million) of Bitfinex, 57% (USD 349.4 million) of BitMEX and 42% (USD 22.7 million) of Binance are long positions. In addition, hourly volumes on the margin trading platforms BitMEX and Bitfinex jumped to their highest levels since mid-December.
Compared to the volumes of June 2019, when Bitcoin reached a price of USD 13,700, the current volumes are still insignificant. In addition, the total volume in the Bitcoin market is still about 90 percent below the June level. This leaves doubts about the chances for a lasting upward trend.
Numerous experts attribute the current rally to the global political situation. In the last few days, after the US air attack on Iranian targets, safe-haven investments such as gold and crude oil have recorded significant price increases. For example, the price of gold has risen to a six-year high. Bitcoin may also have benefited, as CNF reported. According to another theory, the January effect could be responsible for the rise.
Critical moment for the Bitcoin price
From a purely chart technical point of view, however, it remains to be stated that the price of Bitcoin has been moving within a downward channel for more than 6 months, as the analyst “Crypto Bullet” noted in an analysis on Tradingview:
7.8k-8k is a strong horizontal level, which lasts from November 2017 (!), the 100-Day MA is in line with the downward channel resistance and coming up right there + the 50-Week EMA + it’s 0.382 Fib (from the 3k low to 13.9k high). So, 7.8k region is a tremendous confluence of resistance and breaking above it would mean a lot for the bulls.
However we need a higher high for clear confirmation. If we do not manage to break that Resistance Cluster and pull back to 0.5 Fib at 6.6k – prepare yourself for sub 6k prices.
It therefore remains to be seen whether the current rally will continue. The coming hours and days are likely to be very instructive for investors.
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