Bitcoin still looking overextended: this is the BTC level to watch

28 Jun, 2019
by Lourens Pepler
Price Analysis
Bitcoin still looking overextended: this is the BTC level to watch

Bitcoin could still be making its way towards the $8400 level on the higher time frame, and in today's BTC analysis we take a look at what the momentum tells us right now, and what possible resistance levels there are for a retracement on the lower time frame.

Highlights:

- Momentum generally trending down

- RSI overextended

- $12000 resistance to watch

Starting off with a 15min chart, we are able to spot the general downtrend that has formed on price. Drawing a simple trend line on the highs allows us to see where price reached overextended levels, before returning to the downtrend. We can now see that price is once again outside of this trend, indicating that it could be overextended and soon to return to below the trend line. 

BTC/USD chart provided by Tradingview

If we look at price to spot possible resistance levels, we are able to see the point at which the uptrend was broken to the downside. Usually, after a breakout either to the upside or downside, price tends to return to the breakout level. Assuming this is the case for today would put our resistance level near $12000.

BTC/USD chart provided by Tradingview

Taking a look at RSI now, we can see that the general trend for momentum is still downwards and that current momentum is outside of this trend. Since RSI quickly moved from 30 to 70, it indicates that this move up could simply be a retracement for the downtrend and that momentum is currently at resistance. As we know, the 70 RSI acts as strong resistance during a downtrend, just as the 30 RSI acts as support during an uptrend.

BTC/USD chart provided by Tradingview

Now moving over to the hourly chart and looking at RSI, we are able to see the general downtrend for momentum. Currently sitting above the downtrend could indicate that this is a bull trap. A bull trap is formed when RSI pushes above the general downtrend, indicating momentum is overextended and soon to fall back to the trend.

BTC/USD chart provided by Tradingview

If $12000 can prove as strong resistance today, we will see Bitcoin fall back to below the trend on RSI heading for a new low, which will cause price to also make a new low, taking it to the target of $8400 for this decline.

Do you think Bitcoin can break $12000 and return it to the heavy uptrend, or is this a bull trap and we are heading for new lows? Let us know what you think in the comments below!

Disclaimer: Keep in mind this not investment or trading advice, just the opinion of our analysts. As always, do your own research, make your own decisions.

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