After facing a surprising number of ups and downs, Bitcoin is finally approaching its target of $245. But, what after it reaches its target? Will it extend the gains or will it succumb to profit booking? Let’s conduct a technical analysis on the daily BTC-USD price chart to estimate that.
Bitcoin Chart Structure – Bitcoin has edged above $240 after repeated failed attempts. The cryptocurrency has touched a high of $241.89 as it crossed the pressure point and is now trading at $240.67.
It must also be observed that Bitcoin has been trading in a higher top, higher bottom structure since Sept 22. Even if bulls were to hold this structure, profit booking should be expected near $245 which may create an investable dip.
Another point of contention is that the technically crucial 200-day simple moving average of $245.7799 will act as a cap for Bitcoin.
Moving Average Convergence Divergence – The MACD, the Signal Line and the Histogram have advanced to the positive territory with respective values of 1.2636, 0.2463 and 1.0174. With all the components turning positive, bulls should not let go of this opportunity.
Momentum – The Momentum reading is relatively flat at 6.8600.
Money Flow Index – Bitcoin is definitely overbought if the latest MFI reading is to be taken into consideration. MFI values above 75 are generally taken as overbought and the current value is 78.5463.
Relative Strength Index – The RSI value has jumped to the highest level in over a month, i.e. 58.0319.
Owing to the pressure that Bitcoin is facing on its way up, it is hard to tell as to when exactly the target will be met, however, a conservative estimate should be the next 24 hours.
Expect profit booking on higher levels as the market gets overheated. In case of negative surprises, observe the chart structure for important clues. A violation of the higher top, higher bottom will be one such clue, which will signal a bearish reversal.