Bitcoin has started an explosive rally after finding support in the middle of the $16K price level. Since then, BTC has broken above the 100 and 200-day moving averages at $18K and $19.6K.
After a prolonged downtrend, the breakout of the price above the 200-day moving average is a substantial bullish sign for the market. If the bulls hold the MA-200 level, adequate demand is likely to return to the market and sentiment will continue in the short term.
However, there is an obvious bearish divergence between the price and the RSI indicator on the daily time frame, which could result in the need for a correction in the coming days and after the rally.
the daily chart
The 4 hour chart
Professional traders use pivot points to determine support and resistance levels. Simply put, a pivot point is a level at which the direction of a price movement can initiate a reversal.
The chart below shows that BTC price has recently broken out of two significant pivot points and is consolidating around the $23K level. The next crucial resistance level for Bitcoin is the next big pivot at the $25K price levelwhich has also been a static resistance level for the past few months.
However, bearish divergence is also seen on the 4-hour time frame. There is a greater chance that the price will enter a short-term consolidation phase between the $23K and $21K levels before rocketing towards the crucial $25K resistance region.
chain analysis
For Shayan
The chart below provides an overview of the last four Bitcoin price cycles, including the 2017-2018 and 2019-2023 bull and bear markets. It contains the price of Bitcoin along with the MVRV metric, which implies the ratio between the market cap and its realized capitalization, indicating whether the price is overvalued.
Historically, the metric falls into the green zone during bearish market phases, which means that Bitcoin is trading in the undervalued section and the bottom of the cycle is forming. However, as the chart demonstrates, every time the MVRV metric spiked above 1, Bitcoin surged and the bull market began.
Bitcoin’s recent rally has resulted in a sharp rise in the MVRV metric. Therefore, the market could have entered a bullish phase in the medium term, followed by sudden moves and increased volatility.
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cryptocurrency charts by TradingView.
