Disclaimer: The information presented does not constitute financial, investment, trading or any other advice and is solely the opinion of the author.
- Is it divergence before an atom or consolidation before a bomb?
- The evidence suggested that the bulls and bears may be waiting for a proper breakout before entering positions.
January was a solid bullish month for Bitcoin (BTC), Prices increased from $16,500 to $23,700. It rallied to the $21,600 support level in February before rallying strongly to the $25,200 resistance. As things stand, the potential for further gains looks promising for BTC.
Reading Bitcoin (BTC) Price Prediction 2023-24
Along with the rally of the crypto market, USDT (anchor) The fall in dominance means that bitcoin’s rally is mirroring the altcoin market as well. A break after the resistance from July would see relatively large gains relatively quickly.
Stiff resistance at $25.2k but relatively thin air beyond
On the daily chart, there was a pre-bearish block of orders in the $22k area. It turned into a bullish breakout after retesting $21,600 as support in early February. This level also marks the midpoint of the range that BTC traded in from July to November, marking it as an important support level.
The RSI stood at 66 and has not dipped below the neutral 50 mark since January. This indicated that bullish sentiment was dominant and the trend had not changed. Looking at it from a market structure perspective, we can see that BTC has only hit higher lows since breaking above $17.8k in January.
At the time of writing this bullish structure was intact. A daily session below $21,600 would need to shift the bias to bearish.
During the recent pullback, the OBV also saw a decline. Since then, the rally has been supported by increasing OBV. Therefore, there was no difference between the price action and the OBV. A break above $25,200 is likely under sustained buying pressure. The drop from $28k to $22k was quick in June, taking just three days. This meant that there was a large FVG above $25,200, which BTC could fill with an upward run.
However, bulls should remain cautious. There was a chance that the move towards $25,500 could be a divergence before the downtrend. Therefore, risk management should be a priority for any buyer.
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Open interest rises and Spot CVD takes a positive turn
On the four hour chart, Spot CVD has hit higher lows in the past month. This was an encouraging sign for buyers as it strengthened the bullish pressure. The forecast funding rate was also positive, highlighting bullish sentiment even as price is below higher time frame resistance.
More importantly, rising prices also saw a jump in open interest. This was another factor in favor of the bulls and shows that market participants may be positioned for a breakout. Conversely, interested buyers near the $25k mark could provide a leg of liquidity on the downside to sellers, causing immense pain for most market participants.