Bitcoin (BTC/USD) Outlook:
Can Bitcoin Bulls Hold On?
Bitcoin[1] continues to maintain the upward trajectory that has prevailed since March 2020, buoyed by US Dollar[2] weakness and global economic conditions. Although the recent rally has seen an increase in the demand for Bitcoin[3] and other major cryptocurrencies[4], the sustainability of the bullish trend is being questioned after prices reached an all-time high on December 1, 2020, resulting in BTC/USD[5] surging over 160% in the year-to-date.
While fundamentals may play a role in determining the next big move, with US stimulus talks[6] and concerns surrounding loose monetary policy weighing on investor sentiment, trading psychology[7] will likely be an additional driver of price action[8], with many fearing the reoccurrence of 2017’s events, when the ‘Bitcoin bubble[9]’ eventually burst.
Bitcoin Price Action Seeks Direction
After reaching an all-time high of $19,861, the momentum of the uptrend subsided, pushing price action into a confluent zone, between the Fibonacci retracement[10] levels (between September 2020 and December 2020) which continue to hold as support and resistance[11]. On the daily time-frame, price action remains within the parameters of the Bollinger Bands[12], while the Relative Strength Index (RSI)[13] hovers around 60.
Bitcoin (BTC/USD[14]) Daily Chart
Chart prepared by Tammy Da Costa[15], IG
Evening Star Formation may Hold Bulls at Bay
Meanwhile, the formation of an Evening Star[16] on the two-hour chart suggests that a bearish reversal is probable, but as long as the uptrend remains intact a bullish continuation cannot be ruled out.
