- Bitcoin remains unable to break a key $23,700 barrier
- This band of resistance has been keeping Bitcoin down since July last year
- Another rejection here would likely send Bitcoin back down to the $22,000 region
Bitcoin has started the week underneath an important resistance area, with its reaction over the coming days dictating its short to medium term path. This $23,700 region has proved pivotal in keeping Bitcoin’s price down since July last year, and Bitcoin can forget any longer term gains until it can defeat it. However, with the U.S. Dollar Index looking topped out after its short run, it may get a chance soon.
Bitcoin Making Lower Highs and Lower Lows
Bitcoin has been in a downwards trend since it failed to break $25,000 at the third time of asking last week, finally bouncing at $22,700 and rebounding right into an area of resistance that has been significant since last year. One look at the 4-hour chart shows us the situation clearly enough:
We can clearly see that Bitcoin has rejected at this resistance band, the same band from which it bounced last month. The importance of this area is emphasized when we look at the long term picture:
Each time Bitcoin has crossed this threshold it has rejected shortly afterwards, so crossing it and staying above it for a sustained period is clearly a critical step in its road to recovery. The other concerning factor is that Bitcoin had been putting in a series of lower highs and lower lows on the 4-hour for the past week, suggesting a downtrend is in play. If Bitcoin can’t reclaim this band of resistance and turn it into support then further declines towards the next support level of $21,700 are likely, unless it can double bottom at $22,700.
DXY Topping Out?
One factor which might work in Bitcoin’s favor is the U.S. Dollar Index, which is coming into its own area of resistance:
The DXY has been bouncing since the start of February, and is getting towards a point where we can expect a slowdown. However, should the dollar push through this region, either now or at some point in the future, this would indicate that it is in its own bull run, which would make for a very unpleasant rest of 2023 for Bitcoin indeed.
