Bitcoin (BTC) price has reached an important resistance area that was previously providing support since the beginning of 2021. Will Bitcoin be able to breach this resistance or is it time for a correction?
Bitcoin price has been rising rapidly since validating the long-term resistance line as support in March. This created a long lower fuse (symbol green). These wicks are bullish signals because the sellers cannot push the price lower. Instead, buyers regained momentum and caused the price to close above its weekly lows. As expected, the price of BTC has increased rapidly since then.
BTC reaches a yearly high
In the following week, BTC broke out of the $24,500 resistance area and has now reached the horizontal resistance at $31,000. This is a very important area because it has previously acted as support since the beginning of 2021.
The Relative Strength Index (RSI) is rising and is now above the 50 level, which indicates an upward trend. The RSI is a momentum indicator used to identify overbought or oversold conditions. An upward trend and a reading above 50 indicate that the bulls still have momentum.
This supports the possibility that the price will clear the $31,000 resistance area and validate it as support. If so, the next resistance will be the $46,000 average price.
On the other hand, rejection from the $31,000 resistance area could lead to a drop to $24,500.
Bitcoin BTC Price Prediction: Will the price clear $31,800?
Technical analysis from the daily time frame provides a bullish prediction for the price of BTC. It shows that the rate of increase accelerated after the price rebounded at 0.618 Fibonacci retracement support level on March 10 (green symbol).
Fibonacci retracement levels work on the theory that after a significant price move in one direction, the price will correct or return part of the way to the previous price level before resuming in the original direction.
Since March 16, the digital currency has been trading within an upward parallel channel. These channels usually have corrective structures, which means that an eventual breakout is likely from them. Furthermore, the daily RSI has established a bearish divergence (green line). A bearish divergence occurs when an increase in price is not accompanied by a corresponding increase in the RSI. It indicates that momentum is waning and often precedes downtrend reversals.
If BTC price breaks out of the channel, it will invalidate the bearish divergence. As this could also mean a break above the $31,000 resistance area, it would confirm the upside in the process.
On April 18, BTC created a bullish engulfing candle. This is a type of candlestick in which the full decline from the previous day is nullified into the next day, and the price closes higher than yesterday’s opening. As a result, it supports the possibility that Bitcoin could break out and negate the bearish divergence in the process.
While a breach from the channel may accelerate the upward movement towards $46,000, a breakdown from it may invalidate the bullish hypothesis and may cause a decline to $24,500.
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In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.