Bitcoin has had a mammoth run, but $79,400 is starting to look like a problem for late-to-the-party bulls.
It has acted as support and resistance for lengthy periods this year and Bitcoin has now had one, two, three cracks above it. All have failed, with the latest rejection delivering a candle that looks a lot like a shooting star.
After such a strong run, the price action deserves some attention.
RSI (14) is still sitting deep in overbought territory on the dailies, with marginal bearish divergence developing against price. On shorter timeframes, RSI has already rolled over while four-hourly MACD has staged a bearish crossover.
Now, none of that is enough on its own to justify stepping in front of such a powerful move. But if Bitcoin has another crack at $79,400 and fails again, then the case for a short looks a lot more appealing. At some point, repeated failures stop looking like bad luck.
If the price has another crack at $79,400 and gets slapped back lower again, it strongly suggests someone, or some group, really doesn’t want Bitcoin establishing itself above there and making a run towards the May swing highs.
If we see another failure, shorts could be set beneath the level with a tight stop above for protection against reversal.
$78,000 is the first downside target, followed by $76,000. Both levels saw plenty of price action earlier this year. Beyond that sits the more important $73,500–$74,500 support and resistance zone, an area that has previously launched some pretty sizeable moves in both directions. If the unwind were to gather speed, that would be the ultimate downside target.
Of course, if we see a raid above $79,400 that sticks on the dailies, the setup could be flipped with a long entry above and tight stop below, seeking a retest of the May high of $82,800, with $81,250 a reference point in between given it was where the rally stalled earlier this week.
Good luck
DS