The Bitcoin market is often full of surprises and last week was no exception. Bearish sentiment was dominant, and the cryptocurrency seemed to be days away from creating a new lower low. However, a significant price rally has changed the view from a technical aspect.
The Daily Chart
Looking at the daily timeframe, Bitcoin has bounced back from the key $18K support level once more, and rallied impulsively above the $20K mark last week. The price has currently reached the 50-day and 100-day moving average lines, which are converging around the $22K area.
If the price breaks these moving averages to the upside, a crossover between them would occur, which is a strong bullish signal. However, in order for the market to be considered bullish in the mid-term, a breakout above the significant trendline demonstrated on the chart and the $24K resistance level would be necessary.
On the other hand, if the price gets rejected from either of the mentioned static and dynamic resistance levels, a return towards the $18K level and even a breakout below it would be probable.
The 4-Hour Chart
On the 4-hour chart, The price has broken above both the bearish trendline and the $20,500 level after rebounding from the $18K area.
Currently, the cryptocurrency is testing the $22K resistance level, and a bullish breakout from this level would pave the way toward $24K. However, the trend seems over-extended. This suggests a bearish pullback toward the $20,500 level – which has now turned into support.
Additionally, the RSI indicator, which had been signaling a massive bullish divergence before the reversal, is now demonstrating a clear overbought signal with values above 70%. This further boosts the probability of a short-term pullback.
Binary Coin Days Destroyed (CDD) Metric
The long-term holders are a vital cohort among market participants. Hence, tracking their behavior might help in anticipating the market’s direction.
The Binary Coin Days Destroyed metric can be used to identify the long-term holders’ activity. It points to 1 if Supply Adjusted Coin Days Destroyed is larger than the average Supply-Adjusted CDD and points to 0 if not.
The following chart depicts the Binary CDD metric (14-day SMA) and Bitcoin’s price. A spike in the metric indicates potential selling pressure from long-term holders. Each time the metric printed a surge, the price dropped significantly.
Currently, the metric and the price have both experienced a massive rise. Long-term holders might find this rebound an excellent opportunity to distribute their assets and manage their exposure to the market.
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Cryptocurrency charts by TradingView.