Despite the relative performance of altcoins in 2023, Bitcoin has seen a significant 75% bullish rally since the beginning of the year. However, Bitcoin’s price has been unable to surpass the resistance level of $30,000 for a week, and this has stirred a technical belief that there is a possibility of a retracement streak toward the medium-term support level of $25,000.
Is Bitcoin’s Rally Losing Steam At $30,000?
The annual upward movement in the price of Bitcoin, fueled by the banking crisis in March, may be hitting a roadblock at the $30,000 resistance level. To assess the underlying dynamics of BTC, we need to look at an extended chart, which provides a longer-term perspective spanning several weeks.
Historically, the bullish reversals in this time frame have shown a well-defined chart structure, with phases of bullish impulses followed by periods of sideways transitions.
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The recent bullish reversal in the last quarter of 2022, followed by the rebound from $20,000 that kickstarted the current rally, was preceded by a notable bullish momentum divergence (as indicated by the RSI technical indicator) from the oversold zone.
Bitcoin Could Hit The $25,000 Support Level In Coming Days
The RSI indicator has entered the technical overbought zone as BTC approached the $30,000 resistance level. The overall chart pattern resembles that of August 2020, which saw a retracement from $12,000 to $9,500 before the subsequent bull run starting in October 2020.
Considering chartist probabilities, the scenario of a retracement towards the major support at $25,000 has gained in probability. Therefore, preserving the $25,000 support level would be a key factor in invalidating the bullish trend in 2023. This retracement scenario could be triggered by a break of the short-term support at $28,800; the upper part of the bearish gap opened on Monday, June 13, 2022.
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The market is on a precarious edge following a significant session of long position liquidations. To avoid a potential return to $25,000, the market would need to bounce convincingly off the $28,800 level and break above the intermediate resistance at $29,500 to signal renewed bullish momentum. The situation remains fluid, and further price action will provide more insights into the direction of BTC’s price movement.
The Impact Of Interest Rates And US Dollar On Bitcoin’s Technical AnalysisBitcoin is currently at a crucial chart juncture, and the market is expected to decide in the coming hours. This decision is likely to be influenced by two key factors from the inter-asset class dynamics: the trend of market interest rates and the behavior of the US dollar on the Forex, which has returned to its annual low and is acting as a support level.
If there is a continuation of the rebound in rates and a breakout of support on the US dollar, it may negatively impact Bitcoin’s price and increase the likelihood of a decline toward $25,000. On the other hand, if there is a cessation of the rebound in rates and the US dollar support level holds, it may counter the scenario of a decline toward $25,000. The market will ultimately determine which direction Bitcoin takes.
(This is not financial advice and is the observation of the author. Featured Image from iStock, charts from TradingView.com)