Trading Bitcoin: Price Back Above $8,000 | False Breakout?

Trading Bitcoin: Price Back Above $8,000 | False Breakout?

Bitcoin is currently trading at roughly $8.1k and has bounced from our previous lows of $7.4k. On the daily chart above, Bitcoin is on a red 5 of 9 candle. While, price has increased 3% today, it is still unlikely that the bulls will break above $8.3k in one attempt. Due to historic support and resistance at $8.3k, it should take the bulls multiple attempts before a break above resistance occurs. However, Bitcoin’s daily RSI is now bullish and has ended its bearish divergence.

4 Hour

Bitcoin is currently on a green 4 of 9 candle on the 4 hour chart above. As you can see, Bitcoin has been traveling in a sideways price channel since $8.8k. After holding support at the 200MA (orange), Bitcoin has increased back into the 8.1k price range. However, the 128MA and 50MA are acting as resistance at the $8.2k price level. Since we are at a green 4, sequential is telling us that there will be continued upward momentum in the short term, but overall Bitcoin faces strong resistance at $8.3k.

1 hour

The chart above is a perfect example of how useful the sequential indicator can be. If you were day trading with the 1 hour chart above, sequential gave you two opportunities to profit. First, Bitcoin reached a red 8 and experienced a bullish price flip on the following 9 candle. This was a perfect knife-catching opportunity if you were trading based off sequential. Additionally, Bitcoin reached a green 9 shortly after which then led to another price increase. Sequential gave you two optimal entry points based off time. The sequential indicator isn’t perfect, but it has provided reliable entry and exit positions throughout the past year.

Cryptocurrency News

Indian lawmakers have proposed a 10-year jail term for citizens using cryptocurrencies. The law applies to those who mine, hold, buy and sell cryptocurrencies. Also, the RBI (Reserve Bank of India) has postponed their plans to implement a state digital currency such as the ‘Crypto Rupee.’ The price of Bitcoin has remained unaffected by the news.

Conclusion

Bitcoin has increased to $8.1k but still faces strong resistance at $8.3k. According to our metrics, the bulls are likely to be rejected by resistance at $8.3k before a possible retest higher. If the bulls can break above $8.3k and resume bullish momentum into the $9,000s, price could easily make new all-time highs. However, it is more likely that a rejection at $8.3k will occur, followed by another pullback and retest of support at $7.6k.

Disclaimer: The author of the article owns Bitcoin.