Bitcoin Could Be Forming “Local Top” as Indicators Suggest Rally is Overheated
- Bitcoin has seen one of its first strong pullbacks posted in the time since its rally formed its latest leg higher that led it all the way up to $24,200
- The rejection here proved to be quite intense, as it sparked a selloff that led the crypto as low as $22,000 this morning
- The support here was quite intense and helped slow its ascent, with buyers aggressively stepping up to guard against a decline below here
- Where it trends next will likely depend on its continued reaction to this key level, as any sharp decline beneath it could give way for it to see some major downside
- One trader said in a recent tweet that multiple indicators are now suggesting that downside is imminent for the entire market
Bitcoin and the entire cryptocurrency market has been rocked by immense volatility over the past couple of days, with the selling pressure seen above $24,000 giving rise to the benchmark crypto facing a massive selloff.
It has found strong support around $22,000 that may continue bolstering its price action, but there remains a strong possibility that where it trends in the mid-term will depend largely on its continued reaction to this level.
One trader is now noting that a few indicators suggest Bitcoin’s rally is still over-extended and that the cryptocurrency may be positioned to see some serious near-term losses.
Bitcoin Loses Short-Term Momentum as Selling Pressure Mounts
At the time of writing, Bitcoin is trading down just over 3% at its current price of $22,700. This marks a slight rebound from daily lows of $22,000.
The crypto may now form a range between these lows and $23,000, with its near-term trend depending on which of these two levels are shattered first.
Analyst: BTC Shows Signs of Being Overheated
Despite this retrace, one analyst believes that there may still be further downside in store for Bitcoin.
He notes that the cryptocurrency’s weekly RSI and Stoch RSI both suggest that the crypto is overbought at the moment.
“BTC – Weekly RSI and Stoch RSI significantly overbought. It has been a trending market and oscillators can remain overbought – but I’m just being cautious here…. Local top?”
Image Courtesy of TraderXO. Source: BTCUSD on TradingView.
The coming few days should shine some light on where the entire market will trend in the mid-term, as it should depend nearly entirely on Bitcoin.
Featured image from Unsplash. Charts from TradingView.