- Bitcoin trend is highly bullish despite overbought technical indicators
- BTC/USD ready to pierce $17,000 as bullish wave takes down $16,500 resistance
- Bulls defend the $15,970 support region for a bullish takeover
Bitcoin trend defies technicals to power beyond $16,500
As the Bitcoin trend enters the sixth week of bullish rise, the price is signaling exhaustion. Traders are becoming increasingly cautious as more green candles pile up on the daily and hourly charts. In the last six weeks, BTC/USD has risen close to 60 percent. Such a stratospheric rise is unparalleled and displays the underlying strength of the pair powered by both technical and fundamental factors.
Bitcoin’s price rose from $10,000 to touch a new 2020 high of $16,500 in six weeks. Such an exuberance has created ‘FOMO’ or ‘Fear-Of-Missing-Out,’ causing more traders and investors to rush to the buying window. Also, the $9,600 closing gap is closing fast, and investors keep a keen eye on it. The support pivot points are rising quickly on the daily charts bringing more higher highs into the picture. So, is the Bitcoin trend perpetually stuck in the bull territory, or is there a contradictory play emerging? Let’s find out.
BTC/USDT 4-hour chart – Clear bullish uptrend
The hourly charts are defying the technical data to post multiple new highs. Despite multiple layers of support, the traders anticipate an overheated timeframe. Since the breakout from $10,000 two months ago, the hourly charts have been bullish with slight corrections.
The recent high of $16,490 is enough to keep the bulls occupied. As the simple moving averages keep climbing higher, the ascending price channel also rises subsequently. The breakout above the rising channel has been muted so far. Whenever the price broke beyond the $16,500 resistance, it has toned down towards the $16,150 support region.
So far, bulls have managed to identify a ‘fakeout’ and immediately responded to any untoward bullish wave. The market reversals have been handled well by the bulls who turned them into buying/accumulation zones. The range between the $15,600–$15,750 region has been a substantial buying area helping build the upside movement. The next resistance lies at the $17,500 region, where the bears have built large sell positions. With strong support emerging at the $14,800 area, the bulls have a lot to consider before building the next rally upwards.
Consecutive green candles – Genuine trend or a fakeout?
The BTC/USD chart is now has printed a sixth green candle on the weekly charts. The bulls will cheer as the bullish pattern is now validated across the board. The upward momentum, though overstretched, is evident on the weekly charts as the support regions are moving higher along with an upward sloping simple moving average. Also, the price channel is moving higher.
— John Bollinger (@bbands) November 9, 2020
When Bitcoin’s price broke $13,200, the resistance was unbearable for the bulls. Back then, the repeated rejections from $12,500 and then from $13,000 created multiple hurdles for the bulls. The ensuing accumulation phase helped build the perfect wave that culminated in a breakout. Consequently, the resistances became support, and now a strong support zone exists between $13,500 to $14,900. The bulls have built strong defenses between $15,500 to $15,700 area.
The bullish Bitcoin trend is likely to continue as long as the $15,700 support stays strong. A bearish breakdown below the critical support area can unleash new lower levels bringing $14,000 into the picture.
Bearish Bitcoin trend scenario – $12,000 is still possible
The weekly resistance levels still hover near the $12,000 level. Even though the price broke above the $12,000 mark on the weekly charts, there’s a sloping resistance near this price level. The bulls are focused on $15,750 resistance on the daily charts. However, can they ignore the weekly resistance levels which lurk beneath?
There are still several untested support levels waiting to be beckoned by an exaggerated bearish wave. The waning liquidity on the hourly charts can offer a prelude to a bearish wave. The $12,000 posed a challenge psychologically as it was defended by the bears for around two years.
As the market turns from positively bullish to euphoric buying, the fear index also rises. Many contradictory traders study the highly bullish sentiment to setup a contrarian trade. Therefore, a pullback won’t be surprising as the Bitcoin trend boards a bull-only bandwagon.
Fear & Greed Index is throwing red signals
The Crypto Fear & Greed Index gauges the market sentiment according to the buying activity. At present, the readings are close to 90, signalling that the current Bitcoin trend is ‘extremely greedy’ or bullish. The last time these readings were observed back in 2019 and represented the top of the June bull run. Thus, the fears of an exhausting bull Bitcoin trend are evident.
Many traders argue that the ‘Crypto Fear & Greed Index’ isn’t a reliable indicator of the actual market sentiment. It does indicate the immediate market mood. Both traders and investors can gauge the market’s euphoria and exuberance. Given the current FOMO factor, the index is undoubtedly helpful to avoid market tops. Traders can anticipate corrections and eventually set up healthy trades.
Institutional selling poses a threat to the rising BTC trend. The high deposits of the past few months by BTC whales represent an accumulation strategy. However, the recent trend of BTC whale selling shows that the deposits may be liquified at higher levels. The strategy to book profits by large investors and institutional players does pose a bearish turnaround to the Bitcoin trend.