Bitcoin price has been consolidating between the $20,000 and $24,000 levels for the past two months, after a rapid decline from the $30,000 level. The $17K-$20K support area is holding well, pushing the cryptocurrency higher towards the $24K resistance on several occasions, but it has so far failed to break through.
The Daily Chart
Currently, the price action suggests that Bitcoin may finally break this important level to the upside, which could pave the way for a rally towards the $30,000 supply zone. The 100-day moving average is currently at the $26,000 mark and is likely to offer some resistance. Conversely, on a downside, the 50-day moving average – currently at $21k – will likely act as support.
The 4 hour chart
On the 4-hour time frame, the price continues to try to push the flying flag pattern higher after it was rejected lower for the third time. However, a smaller bullish pattern seems to be forming and the price is currently breaking through it. The flags are continuation patterns and a bullish breakout from the bull flag could start another rally towards the higher trend line of the larger pattern.
Price will potentially break above this. Furthermore, the RSI is still hovering around the 50% mark. This shows that neither the bears nor the bulls are in control and the momentum is in balance. The outlook is likely to change after the weekend.
The market seems to be looking for direction, but the big players are standing still. Following Powell’s speech in recent weeks and the Fed’s decision to raise interest rates, the price of Bitcoin has surged beyond the “Realized Price”, a critical threshold to sustain the price.
Consequently, to cross the Realized Price level again, more volume and huge selling pressure is required. The MVRV indicator makes it easy to track the price of Bitcoin against its realized value. It shows how the cryptocurrency rose last week from the undervalued zone. However, despite the quick surge from the indicated area, the 365-day moving average still shows room for another substantial reversal based on previous cycles.
Therefore, before the big rally, another drop will be likely given the current market confusion and uncertainty as well as the current recessionary state of the global economy.
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