- Bitcoin has broken out to the mid $23,000s, taking out a couple of key resistance areas
- A push to $30,000 is possible, but there are still some signs that all is not as positive as it seems
- Bear market rallies are another form of market manipulation
Bitcoin has broken out of a channel it has occupied since mid-June, suggesting a bear market rally is just beginning. But do the charts support such a move, and where will it end? Let’s find out.
Bitcoin Breaks Out of Channel
Bitcoin has broadly kept to the same channel for five weeks, ever since dropping to $17,600 in the wake of the Celsius/Three Arrows Capital collapses. Yesterday it broke out at the third time of asking:
While this is certainly a positive sign, a retest of the resistance line would give ultimate confidence that price can continue upwards, which would look something like this:
Of more importance perhaps is the fact that Bitcoin has also broken through the 200-4HR MA, something we highlighted last week is an important indicator of a short term reversal:
There’s even more good news. This move up has coincided with a breach of the 200-week MA, whose importance can be clearly seen here:
This all suggests that Bitcoin is in for a continued rally, perhaps up as far as the first natural resistance of $30,000:
Before we get too excited though, we must remember that unless that $30,000 barrier is taken out and treated as support, Bitcoin is still in a bear market. There is a clear downtrend in place that must also be overturned before we can even think of any meaningful upside:
What we also have to look at is the total crypto market cap, as this will give us an idea of how much money is coming back into the space from the sidelines:
As we can see, a crucial resistance point has been hit and respected, showing that it is going to take a bit more effort to break through it, which means many more people are going to have to have confidence that a meaningful rally is on the cards.
If Bitcoin can drag the rest of the space upwards and get the total market cap to treat that resistance as support, then a truly meaningful bear market rally could be on the cards…just remember to take profits!