Analyst Josh of Crypto World recently revealed that Bitcoin is currently facing rejection from a critical resistance level and is simultaneously flashing short-term warning signals. This hints that new liquidations could be on the edge. Here is a breakdown of his analysis:
Bitcoin’s Current Market Behavior
Starting with the four-day Bitcoin chart, there hasn’t been significant movement over the past day. Looking at the daily Bitcoin chart, we observe a period of sideways consolidation, with choppy price action reflecting the US Dollar Index (DXY). The DXY’s neutral position means it isn’t exerting much influence on Bitcoin’s price.
Historically, a bearish DXY signals bullish prospects for Bitcoin, while a bullish DXY tends to be bearish for Bitcoin. Currently, the DXY has not confirmed a bullish trend reversal and remains in a bearish trend, which is a positive sign for Bitcoin’s trend and momentum. However, it’s essential to note that short-term pullbacks can occur even within a bullish trend.
Critical Resistance Levels
At present, Bitcoin is experiencing a short-term rejection at the resistance zone between approximately $67,000 and $68,000. The upper limit of this resistance is just above $68,000, as shown by the volume profile showing substantial traded volume around these levels.
Should Bitcoin manage to break above this resistance with confirmed daily candle closes and potentially flip it into support, the next major resistance lies between $72,000 and $74,000. However, if Bitcoin faces further rejection from this resistance, major support is expected around $63,000 to $64,000.
A break below $63,000, especially dipping towards or below $60,000, would signal a bearish trend reversal. Another bearish indicator would be a bullish reversal in the DXY, which hasn’t occurred yet.
Short-Term Warning Signals
The daily Bitcoin chart reveals a confirmed bearish divergence on the six-hour chart, where higher highs in price are met with lower highs in the Relative Strength Index (RSI). A bearish divergence typically signals a loss of bullish momentum and can lead to sideways consolidation or a short-term pullback.
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