Renewed optimism in Bitcoin was sparked on Thursday as the $BTC price rose just over 2%, equating to a dollar gain of around $2,500. This move may not be over on Friday as the price has started to rise again after a short reversal. However, with buying fatigue starting to set in for bulls, and the price approaching the top of the bull flag and the $118,000 resistance, is a rejection the most likely outcome?
Incredibly bullish news for Bitcoin continues to drop. On Thursday, President Trump signed an executive order giving US citizens access to the purchase of $BTC for their 401(k) savings plans. To add to the pro-crypto news, Trump also signed an order preventing banks from denying services to crypto companies.
All this good news for the crypto industry had the effect of providing an upward impulse to the price on Thursday, and with $BTC approaching the top of its bull flag, there may be enough buying momentum with which to get there.
However, if one takes a measurement from the $112,000 swing low for this upside move, it is now at just over 5% and the bulls are starting to run out of steam. It may just be that there could be several days of sideways and downwards price action to come, which would allow momentum indicators to reset, and provide the possibility of a more reliable breakout.
The 4-hour chart shows the latest price action. It can be seen that the breakout of the W pattern did eventually happen. This took the $BTC price beyond $117,000, and a long candle wick down confirmed the breakout, as well as providing evidence of the huge intent of the bulls to buoy the price up.
As things stand, the price is currently taking hold above $116,800 which might now be a tenuous support. It could be that there is enough momentum in the tank to take the price back up to the $117,450 resistance, and even to the top of the bull flag, which coincides with the $118,000 resistance level.
Be that as it may, all shorter term Stochastic RSI indicators are now at or near the top, suggesting that this upward impulse may be about to come to an end. The top of the bull flag would be an ideal place for a reversal to occur.
The daily chart reveals a critical signal in the Relative Strength Index. Looking at the bottom of the chart it can be seen that there are two descending trendlines. The first one was for the previous bull flag, and the second for this current bull flag.
When the first trendline was broken it led to the huge 25% upswing in price action. Going forward to the current bull flag it can be observed that the indicator line on the RSI has just broken through the descending trendline, and could be confirming the breakout right now.
There is still the rest of the day to come, and so there is the possibility that if the price does turn back down, a fakeout could be the end result. That said, if the indicator line remains above the trendline at the end of today this would be very bullish.
Zooming all the way out into the monthly chart the RSI indicator can be seen right beneath the descending trendline that goes all the way back to Q1 of 2021. Getting above this trendline is a make or break situation. If the bulls can push the price up and the downtrend can be broken, there could be a massive upward impulse. However, even if this scenario comes to fruition, the RSI indicator will need to continue up and eventually get above 91.5 in order to cancel out around 5 years of bearish divergence.
This is the tallest of tall tasks, and it is likely to need an event such as sovereign countries like the US committing to buying large amounts of Bitcoin. This is certainly a possibility, but will it happen in time to save this Bitcoin bull run?
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