Bitcoin is teetering yet again as bulls struggle to take the currency north of $300. The strength in the US dollar in the anticipation of the interest rate hike is also adding to their troubles. The wait to reach new highs in 2015 may get prolonged if bulls fail to up the ante soon.
As can be seen from the 240-minute BTC/USD price chart above, Bitcoin at $292.86 is trading close to its two major support lines, Support Line 1 and Support Line 2. Both hold immense value in the short term as the price has marched up by retesting them several times. Unless the price crosses the two trendlines on the downside, bulls have the upper hand, otherwise the price may well plummet to its previous consolidation level of $270.
Technical Indicators say “Stay Cautious”
- Negative Histogram reading – The Moving Average Convergence Divergence (MACD) indicator reveals that even as the price floats near recent highs, the underlying momentum is weak. The Histogram has failed to embark on its positive journey and is still sub-zero at -0.3030.
- Strength at crucial support – Until recently, the price rise was accompanied by an increase in the Relative Strength Index (RSI) reading. But, as the market aims for higher highs, the same cannot be said for the strength level. The chart above shows the upward march of RSI index, which is now at an important support level of 62. A price rise lacking in strength cannot hold for long, and hence, a break below the upward trendline in RSI should be carefully watched for.
Conclusively, it can be said that short-term buying should only be done with a stop-loss placed just south of the indicated support lines. Technical indicators must also be keenly attended to if negative price shocks are to be avoided.