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Looking Heavy: Bitcoin Price Eyes Correction After New Record High
After reaching a fresh all-time high yesterday, bitcoin could be losing its upside momentum.
The world’s largest cryptocurrency by market value clocked a new lifetime high of $11,831 at 20:30 UTC Sunday, but closed below the previous record high of $11,377, according to CoinDesk’s Bitcoin Price Index. At press time, BTC was trading at $11,238 – up 0.5 percent for the session.
As per CoinMarketCap, week-on-week, bitcoin (BTC) is up 18 percent, while on a monthly basis, it has gained more than 50 percent.
While the bull market is still intact, bitcoin’s failure to close above the previous record high indicates bull market exhaustion – perhaps associated with investor discussion on social media of possible upcoming South Korean and EU legislation around cryptocurrencies.
Further, a look at the price chart indicates the cryptocurrency could be in for a short-term pullback.
The above chart shows:
- Bitcoin did clock a fresh record high yesterday, but could not close above the previous record highs near $11,500. A similar price action is seen today, as the cryptocurrency clocked a high in the $11,600 region, before falling back below the previous record high.
- Yesterday’s candle has a big upper shadow (gap between intraday high and daily close), which indicates bullish exhaustion.
- A break above the last Wednesday’s big doji candle high (previous record high) lacked volume support (i.e. trading volumes remained well below the level seen on last Wednesday).
- The relative strength index (RSI) shows overbought conditions.
- Bitcoin could re-test the psychological support level of $10,000. The ascending trendline (drawn from Nov. 12 low and Nov. 24 low) could offer support (today) around $9,900 levels.
- However, the 5- and 10-day moving averages are sloping upwards, indicating a drop below $10,000 could be short-lived.
- Only an end-of-day close below the rising trendline could be considered a sign of short-term trend reversal.
- In the larger scheme of things, the chart remains in favor of the bulls. As history shows, majors tops have been formed on the back of bearish price RSI divergence.
Weights image via Shutterstock
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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.
Author: Omkar Godbole
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