BTC buyers are attempting to reject the bearish rising wedge pattern right now, after a short squeeze on the Bitcoin futures market elevated the price beyond $8,300. Will bulls be able to maintain this momentum, or will the heavy selling pressure prove too much to handle? Let’s take a look.
Bitcoin Daily Chart
On the BTC/USD daily chart we can see that the price is still constricting inside the rising wedge pattern that we identified in yesterday’s analysis. Surprisingly however, bullish traders were able to successfully close above the strong $8,200 resistance zone (red area) yesterday which was highlighted as a key historical level.
The unexpected break above this price point has subsequently caused a large short squeeze across the Bitcoin futures market, with Bitmex reporting a $13 Million short liquidation in the last hour alone – according to figures provided by Datamish.
This short squeeze is undoubtedly what’s driving Bitcoin’s price over the $8,300 level right now and closing the gap between the $8,400 above. Looking at the depth of sell orders around the next bull target however, we can see that bear traders have already started loading up in anticipation of a sell-off (see below).
A poignant battle now wages between BTC buyers and sellers.
If bulls capitulate against the mounting selling pressure at the $8,350/8,400 level then it’s likely that BTC’s price will breakout bearish from the rising wedge and tank towards lower supports. Namely the $8,000, the $7,800 and $7,610 levels.
We could however, potentially see bullish traders reject this rising wedge pattern if enough buying volume arrives to counter the sell wall. A break above this level could trigger a significant FOMO rally towards the next psychological level at $8,500 where bulls will likely run into a second wave of bearish opposition.
On the MACD indicator, we can see a marked decrease in selling volume on the histogram as it heads towards a bullish flipping. The 12-MA is also closing in on the 26-MA above as momentum begins to turn favourably bullish.
Right now, we are waiting to see if the price can confidently close above the upper resistance of the rising wedge over the 4-hour chart, to confirm that bulls have rejected the bearish pattern.
Which way do you think Bitcoin will breakout of the rising wedge pattern? Let us know your thoughts in the comment section below!
[Disclaimer: The views and opinions of the writer should not be misconstrued as financial advice.]
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