Yesterday was a very dramatic day for Bitcoin (BTC), as it finally broke out of a month of sleepy, modest uptrending straight to the top of its regional market structure. The big question now looms: will Bitcoin be rejected here and sent back to the bottom of this structure, or break out of it in what could be a massive new bull run?
We start on the 4-hour chart, and first note the parallel channel that was completely broken during trading yesterday. This channel had contained Bitcoin for over a month, and now the top of it may serve as support on a retest.
The volume profile has also been smashed here, marking a clear end to the tepid price action from late March and April. In the short term, Bitcoin has become quite overbought (not pictured), and we may expect a pullback here.
Moving to the daily, we see that Bitcoin has engaged the next inflection zone up, if not exactly taken it fully. The EMAs have been left completely behind, which should give us pause out of caution.
We can also see that volume today is already half of yesterday’s, after just five hours of trading. Today is likely to be an eventful day of trading, one way or another.
Finally, on a weekly chart, we see the most important consequence of yesterday’s price action: price has engaged and briefly surpassed the .786 fibonacci level, which is the limit of the regional market structure.
This level has held, for now. This is not surprising: as we mentioned above, Bitcoin is overbought on low timeframes. But it is easily conceivable that, after a period of rest, Bitcoin could re-attempt a break of this level and succeed.
If it does, there is every chance that the red band could be broken. This red bend represents a multi-year downtrend that currently contains a massive Bitcoin consolidation. If that breaks, there is no telling what could happen.
The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.
Featured Image Credit: Photo via Pixabay.com
