The rally just doesn’t end.
Bitcoin hit $6,300 a few hours ago, smashing through the immediate resistance that many analysts expected to drive it lower in the coming days.
Technical analysis states that support on the way down becomes resistance on the way up, and there has never been a support level like $6,000 in bitcoin’s entire history. Price bounced here many, many times in 2018. Tens, hundreds of millions of dollars changed hands. And then the level finally broke.
On the way back up, we would expect a similar pattern – multiple tests of $6k, with reverse ‘bounces’ downwards off that ceiling after each. Or, at the very least, one test. But it was not to be. Bitcoin sliced through it like a hot knife through butter. This has confounded many analysts. Bitcoin’s price broke $6k only yesterday, closed above it on the daily, and then kept going this morning.
Now, we’re not out of the woods yet. There is a wide band of resistance around the $6k region. In 2018, price dipped as low as $5,700, but a lot of BTC changed hands around that $6-7k level. Closing here on the weekly would be excellent news, but we can’t really consider this resistance band overcome until bitcoin closes above about $7,000. But the fact that it didn’t even pause at $6k is incredible.
We need to watch carefully what happens next. If BTC pushes higher, then there’s really just clear blue sky to the upside. $10k would be a reasonable target – and that mainly because it’s a psychological barrier.
However, a pullback would not be a surprise at this point. Daily RSI is over 70. Weekly RSI is approaching 70 for the first time in almost 18 months. Both can remain over 70 for an extended period, but after such a remarkable rally, we cannot discount the possibility of a fall back to $5k, and if that doesn’t hold, then $4,200. That would repeat the pattern of 2015, and that is quite reasonable to expect. But bitcoin doesn’t like playing to a rulebook, so don’t get caught out. There have already been too many surprises this cycle – and the uptrend is just 5 months old.
Earlier this week, Galaxy Digital CEO Mike Novogratz predicted $20k BTC by 2020. At this point, that appears to be easily within reach, and rather on the low side.
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