Out of nowhere, Bitcoin price shot up by more than 10% and recorded almost $700 in gains in just the past 24 hours. During this sudden price rally, more than $20 billion flooded into the crypto market. After hovering around the $250 billion for 7 days and around the $270 billion for 2 days, total market capitalization suddenly shot up to $295 billion. As of press time, Bitcoin is trading around the $7,400 level and Bitcoin dominance is up at 43.1%.
BTC/USD – Daily Chart
On the 1-day chart, Bitcoin price was able to break through the downtrend that started during the Month of May. Price also broke above the major resistance line coinciding with the 0.236 Fibonacci level, which also acted as double resistance. Price action is currently consolidating around the 0.382 Fibonacci level. The MACD is currently above the signal line, which indicates a strong upward momentum. The RSI was able to break through the resistance line but is currently approaching the overbought levels. A successful break above the 0.382 Fibonacci level around the $7,450 level could signal a continuous upward price action with Fibonacci resistance level at $7,940 and psychological resistance at $8,000.
BTC/USD – 4-hour Chart
Looking at the 4-hour chart, there is an apparent bull flag formation should there be further consolidation around the 0.382 Fibonacci level. The bull flag formation often signals upward price action. If momentum continues, the next target will be $7,950 around the 0.5 Fibonacci level. If there will be rejection at current consolidation, price will re-test the 0.236 Fibonacci support level. The MACD is also highly in favor of the buying sentiment, which indicates further upward momentum. On other hand, however, the RSI is currently way up around the overbought region, which could mean that a price retracement may be coming soon. The RSI sloping downward supports the scenario of Bitcoin price re-testing the $6,800 support level.
All in all, the sudden price increase of Bitcoin is still not very definitive of a long-term bull run. The 0.382 Fibonacci must hold strong and push Bitcoin above the double resistance (trendline resistance and psychological resistance) at the 0.5 Fibonacci level. However, at the 4-hour chart, the RSI indicates overbought conditions, which may indicate a downward retracement back to $6,800 levels.
(DISCLAIMER: This is not financial advice. The analysis and recommendations provided here are based on my own research and personal opinion. Trade wisely!)