Have we reached a local top or are we going above 47 000 USD?

The overall trend on Bitcoin

To see the overall trend of the biggest cryptocurrency, we need to look at the daily chart. This chart shows us that so far, we have mostly moved sideways this year. Ever since the ATH that we created in November 2021, we have been mostly in a downtrend. Last week, we have broken it and moved a bit up. However, the downward movement had much larger volume and dynamics. Bitcoin has lost almost 50 % of its value in the past three months.

1D chart of Bitcoin, Source: Author´s analysis, tradingview.com

However, as I mentioned before, last week we have seen a crucial point. From the stance of technical analysis, we have broken several important indicators and price levels such as:

1. The trendline on daily chart
2. MA21 on daily chart
3. We created a higher LOW and higher HIGH

This meant that we have pushed above 40 000 dollars and now have two main resistances above the current price, which are:

1. 46 158 – 47 131 USD
2. 56 092 – 57 412 USD

From the historical point of view, these two levels are really important and the price has always reacted around these levels. As of now, we have touched the first level of the first resistance, which again pushed us back down. To see it more clearly, lets look at 4h chart.

4H chart and the short term price action

Looking at the 4-hour chart, I can see two different ways this can play out. First of all, the price has clearly rejected the move above 46 000 USD. This means that the current level where Bitcoin can find support is between 40 820 – 41 630 USD. This level can decide about two main things. First option is that we bounce back up from this level and test 47 664 USD on the 4h and 1D charts. Second is that the current value was our new local high and the correction continues. As of now, we cannot clearly state which of these options it can be.

4h chart of Bitcoin, Source: Author´s analysis, tradingview.com

Conclusion

I would be a bit more cautious about all the trades right now, especially longs, since as you can see, we have started a small downtrend again. In the recent week, Bitcoin has had a solid upward movement and thus it is logical that the price might have found its local high. To see what can happen in the near future, I will be waiting for the reaction that we can get around 40 820 – 41 630 USD.