- Bitcoin rallied towards $10,000 but formed new 2020 highs at $9,795.
- As long as Bitcoin stays under $10,000, the risks of breaking down significantly will continue to linger.
Bitcoin woke up from its slump towards the end of last week as well as the beginning of this week. On the downside, Bitcoin tested $9,050 support. However, the buyers waiting to enter this zone pulled Bitcoin initially above $9,300. The bulls, confident in the recovery potential, blasted Bitcoin through the next resistances to the extent of testing $9,800.
At the time of writing, Bitcoin is facing retreat movements amid the fight to stay afloat above $9,600. Only 0.1% of BTC’s value has been lost on the day. Technical analysis shows that the remaining journey towards $10,000 will not be easy.
Bitcoin’s double-top pattern
The formation of a double-top pattern suggests that Bitcoin could succumb to increased selling activity between $9,700 -$9,800. Therefore, for Bitcoin to avoid losses back to $9,000, it must brace for a fight in the seller congestion and focus on touching $10,000 in the short term.
Looking at the RSI, BTC is not yet overbought. In other words, there is still room for growth. Moreover, the break above the 200-day SMA signals that the bulls are likely to remain relatively in charge in the next few weeks. A narrowing moving average gap between the 50SMA and the 200SMA also confirms the bulls’ influence over the price.
Reversal seems imminent
Bitcoin futures trading on BitMEX, a popular contracts trading platform open interest has crossed the $1 billion mark, which has a large correlation with selloffs in the crypto market. The funding rate on the platform is also positive and relatively high. This means that the longs are currently paying the shorts which somehow is a signal (not the Holy Grail) that the longs could consider closing their positions in order to stop the payouts. The situation could see Bitcoin breakdown further especially if it is contained under $10,000.
It’s simply something to keep an eye on
Generally speaking we’ve seen Bitcoin dumping when OI crossed 1 billion $ on BitMex.
Doesn’t mean it has to dump but it’s always something worth keeping an eye on.
— TraderSmokey (@SmokeyXBT) January 28, 2020
BTC/USD daily chart
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