Bitcoin (BTC) has been on a bullish streak in the past few days, as it has broken out of a key resistance level at $48,000 and is now inching closer to the $50,000 mark. The leading cryptocurrency has gained over 10% in the past week, and is currently trading at around $49,500, as of writing. Bitcoin is also outperforming most of the altcoins, as it has increased its dominance to over 44%. However, Bitcoin still faces some challenges and hurdles ahead, as it approaches the next resistance level at $50,000, which could determine its short-term trend.
Bitcoin Breaks Out of Ascending Parallel Channel
Bitcoin has been trading inside an ascending parallel channel since July 20, when it reached a low of $29,300. The channel has been acting as both support and resistance for the price action, as Bitcoin has bounced between its lower and upper boundaries. On September 3, Bitcoin broke out of the channel’s resistance line, which was also coinciding with the horizontal resistance area at $48,000. This breakout was confirmed by a significant increase in volume and a bullish candlestick close above the resistance level.
The breakout also validated the channel as a bullish continuation pattern, which suggests that Bitcoin is likely to resume its upward movement after a period of consolidation. The target for the breakout is calculated by projecting the height of the channel to the breakout point, which gives a target of $66,700. This target is also close to the 1.618 Fib extension level of the most recent downward move, which is at $66,900. Therefore, if Bitcoin can sustain the breakout and clear the next resistance level at $50,000, it could potentially reach a new all-time high in the near future.
Bitcoin Faces Next Resistance Level at $50,000
However, Bitcoin still faces a major resistance level at $50,000, which could pose a challenge for its bullish momentum. The $50,000 level is a psychological and round number, which often acts as a magnet and a barrier for the price action. The level has also acted as a strong resistance in the past, as Bitcoin was rejected from it several times in February and May. Therefore, Bitcoin will need to overcome this level with conviction and volume, in order to confirm its bullish trend and target the next resistance level at $58,000, which is the previous high from February.
If Bitcoin fails to break above $50,000, it could retrace back to the channel’s resistance line, which is now expected to act as support. The support line is currently near $47,000, which is also the 0.382 Fib retracement level of the most recent upward move. If Bitcoin breaks below this level, it could invalidate the breakout and signal a reversal of the bullish trend. The next support levels are at $45,000, which is the 0.5 Fib retracement level, and $43,000, which is the 0.618 Fib retracement level and the channel’s midline.
Bitcoin Shows Bullish Technical Indicators
Despite the uncertainty and volatility around the $50,000 level, Bitcoin shows some bullish technical indicators, which suggest that it has more room to grow. Some of these indicators are:
- The MACD (Moving Average Convergence Divergence) indicator is bullish, as it is positive and increasing, and the MACD line is above the signal line. The MACD histogram is also green and rising, indicating increasing bullish momentum.
- The RSI (Relative Strength Index) indicator is bullish, as it is above 50 and rising, indicating increasing buying pressure. The RSI is also not yet overbought, as it is below 70, indicating that Bitcoin is not overvalued and has more potential to appreciate.
- The Stochastic oscillator is bullish, as it is above 50 and rising, and the %K line is above the %D line, indicating a bullish crossover. The Stochastic oscillator is also not yet overbought, as it is below 80, indicating that Bitcoin is not overbought and has more room to grow.