Bitcoin price has finally broken through a significant resistance level following yesterday’s CPI announcement. However, there is still one major hurdle that needs to be cleared for the price action to be considered bullish.
The daily chart:
On the daily time frame, the price finally broke above both the $18K resistance level and the upper bound of the large falling wedge pattern. From the classic price action point of view, BTC could rise to the $25K level soon.
However, the 200-day moving average (~$20K), a major psychological barrier, remains intact. Breaking above this zone can lead to a rally towards $25,000.
Furthermore, the RSI indicator is currently showing significantly high values, indicating that the price is massively overbought. A short-term pullback or reversal of the 200-day moving average is likely.
The 4 hour chart:
Looking at the 4 hour time frame, the IPC announcement has led to an impulsive break above the $18K resistance area.
While the next target is apparently the $21K level, there is a very high probability of at least a pullback to the broken $18K level, considering the overbought signal from the RSI on both the daily and 4-hour time frames. . Though should the price fall below the $18,000 level, the breakout would be considered failed, leading to a fall towards the $16,800 support level and even potentially the $15,000 zone.
The chart below illustrates the Supply to Profit (%) ratio along with the price of Bitcoin. The metric measures the ratio of the sum of UTXO with gains versus the total sum of UTXO.
An uptrend in the metric shows that more investors are making a profit and might see it as an opportunity to make a profit. This usually results in increased selling pressure and could cause a price reversal.
This week, the market experienced a surge and Bitcoin soared more than 10%, causing more than 13% of the circulating supply of Bitcoin to turn a profit.
Considering the current state of the market, participants could use this opportunity to take some profit and reduce their exposure. Therefore, a short-term consolidation followed by a correction is a likely scenario for Bitcoin in the coming days.
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This post Bitcoin Explodes 14% Weekly, Is $20K Next? (BTC Price Analysis)
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