Bitcoin does not appear to be ripe for a bullish break yet

Bitcoin, BTC/USD – Technical Outlook:

• Bitcoinjump earlier in the week may be part of the consolidation that started a few weeks ago.
• However, the corrective uptrend remains intact.
• What are the most important levels to watch?

BITCOIN SHORT TERM TECHNICAL OUTLOOK – BULLISH

Muted upside momentum associated with the recent bounce suggests that Bitcoin’s rally is showing some signs of fatigue as it tests a tough hurdle.

BTC/USD hit an eight-month high on Thursday and is now testing a crucial ceiling of 25200 in August 2022, near the 200-week moving average (now about 24925). BTC/USD needs to clear the 24650-25200 area for the medium-term downward pressure to ease (see mid-January update).

BTC/USD Daily Chart

Chart created using TradingView

Despite the rally to a multi-month high, the 14-day Relative Strength Index (RSI) failed to reflect the strength. In fact, the lower high RSI is a sign that BTC/USD may not be ready to break past the immediate barrier of 24650-25200 yet. In other words, last week’s jump could be part of the broader consolidation that started in late January, and not the start of a new leg higher.

Bitcoin may continue to remain in the recently well-established 21350-25250 range in the meantime. Meanwhile, the short-term trend remains bullish after it broke in January above resistance at the 89-day moving average (a significant barrier since mid-2022), coinciding with another mid-December barrier of 18370. The subsequent break above 200 -day moving averages have confirmed that the downward pressure has indeed eased (see “Bitcoin Technical Outlook: BTC/USD Turns Bullish”, published on January 18).

BTC/USD weekly chart

Chart created using TradingView

However, for the nascent uptrend to continue, Bitcoin needs to clear the 24650-25200 barrier. This is especially the case if the pattern since mid-2022 is actually part of a broader base building in cryptocurrencies (see mid-November update). On the downside, there is quite strong converged support at 19800-21350 (see the daily chart). The short-term upward pressure is unlikely to fade while BTC/USD remains above the floor.

— Posted by Manish Jaradi, Strategist for DailyFX.com