Bitcoin hits $93,000 after a falling wedge breakout, testing major horizontal resistance as overbought signals, bear flag risk and moving averages collide.
Summary
- Bitcoin price broke out of a falling wedge and rose to $93,000, colliding with a key horizontal resistance zone on the 4-hour and daily charts.
- The price is trading within a potential bear flag, with a downside 200-day SMA and an overbought Stochastic RSI capping the uptrend in the near term.
- A shallow pullback could trigger a breakout to higher structural resistance, while a deeper drop to the major rising trendline would restore sideways action.
The price of Bitcoin (BTC) reached the $93,000 level on January 5, hitting a major horizontal resistance point after breaking a falling wedge pattern, according to technical analysis.
Bitcoin price tests $93k again
The cryptocurrency has risen since exiting the wedge formation, with the price moving up a downtrend line while maintaining support at a major uptrend line on the 4-hour chart, the analysis shows. The advance has taken the digital asset to a significant horizontal resistance level, where the price appears to have met resistance.
Technical indicators show Bitcoin registering overbought conditions over short-term time periods extending to the daily chart, the report said. The stochastic RSI indicators for all short-term periods are at or near their upper limits, the analysis said.
The daily chart shows that the horizontal resistance line represents an important price structure level according to the technical assessment. The analysis indicated that a successful break above this level could lead to rapid progress towards the next major structural resistance, which is significantly higher.
Several technical factors pose challenges to further upside, the report said. Bitcoin remains within a bear flag pattern, with the upper limit potentially aligned with the horizontal resistance level. Furthermore, according to the analysis, the 200-day simple moving average is trending downward, on a slope not previously observed during the current bull cycle.
The price has regained the 50-day simple moving average, showing signs of a possible return to the upside, the report said.
The weekly time frame shows a breakout of a bearish wedge pattern, a formation typically associated with upward price movements, according to the technical analysis. The stochastic RSI on the weekly time frame shows potential for upside momentum once both indicator lines cross above the 20 level, the report said.
Historical data from the weekly chart shows that previous examples of a rise in the Stochastic RSI from the lows, according to the analysis, were followed by strong rallies.
The technical assessment highlighted that price direction will depend on the depth of any pullback, with a shallow retracement potentially continuing the rally, while a deeper decline to the main rising trendline could return price to recent sideways trading patterns.
