Daily chart – huge growth that needs correction
The look at a daily chart is rather boring. We have come to test probably the strongest resistance there is. Bitcoin managed to come to test this resistance almost in one upwards movement from the level of 28 000 dollars, which is now supported by a trendline.
Even when BTC fell in May, I was saying that bull market is not over and it will continue. I still also believe that we will see new ATH this year, but from technical point of view, it would be appropriate for Bitcoin to take a bit of a breather and have a correction. The cryptocurrencies however show a behaviour pattern, in which the longer they test the resistance, the higher the chance of breaking it. One might ask why is that so? The explanation is rather simple.
Resistance is a historical level, where the price used to react in the past. The strength of resistance is only seen by the look at the orderbooks. Resistance is thus formed by the historical levels, yet it is important to know that the strength of it is given by the amount of the sell volume that is visible at the given resistance. If the chart therefore comes to the resistance, and the price is not falling, that means that there are no sell orders, which indicates, that it is only a matter of time until the price breaks above. This is exactly what we might be looking at with Bitcoin now.
4h chart – nothing is decided
The 4-hour chart is rather indecisive as well. We can still be in ABC correction where, if the trendline is broken, we can see bigger correction move. It is important to note that the longer Bitcoin rises on the trendline without any significant correction, the worse will be the correction after the trendline is broken. It will be also really difficult to find a reasonable support, if that happens.
In my opinion, everything now depends on the orderbooks, especially selling pressure. If there is not enough sell orders and no sell walls are created, we might be able to see an upward break of this level fairly soon.
Overall, I am very bullish about Bitcoin for the next year or so. I also do believe in new ATH either at the end of this year or at the beginning of the next one. However, the speed of growth in the last 4 weeks is really high and we are approaching really significant resistance. The chart has to stop somewhere to correct a bit, and this looks like the most reasonable place. Yet, the sell orders are not there, which really decreases the chances for a more significant correction.