Despite the signs of future bearish price action, Bitcoin recorded a considerable increase, successfully regaining the critical psychological resistance of $40K. While the market shows a strong bullish sentiment, there are signs that suggest a potential for a temporary correction.
By means of Shayan
Bitcoin Price Analysis: The Daily Chart
Bitcoin has continued a strong uptrend since the beginning of 2023, consistently surpassing previous swing highs. After a significant development, the price successfully regained the important resistance of $40K, which once again confirms the great demand in the market.
The $40K historical resistance provides a significant challenge for Bitcoin, and its breach indicates a notable presence of buyers.
However, the price has now reached a critical resistance zone, marked by the important $45K region and the upper border of a multi-month ascending channel. Consequently, the market is likely to go through a period of consolidation correction before determining the next directional move.
BTC on The 4-Hour Chart
A detailed examination of the 4-hour chart reveals a phase of sideways consolidation, which ultimately leads to an unexpected rise in price. This enabled Bitcoin to recover the key resistance region of $40K.
After a small pullback to the broken level, the price continued the upward trajectory, targeting the $45K resistance region. This range serves as an important barrier for Bitcoin buyers, and a successful acquisition of this level could lead to another impulsive surge towards the $48K resistance zone.
However, considering the current supply near the $45K price point and the long-term bearish divergence between the price and the RSI indicator, the market appears to need a temporary consolidation period before determining the next this step. In such a situation, the potential support level for Bitcoin is within the 0.5 and 0.618 levels of the Fibonacci retracement, applied to the recent impulsive uptrend.
This cautious approach takes into account the market’s need to build a solid foundation before it can continue its upward trajectory.
By means of Shayan
Bitcoin experienced a significant increase in price, surpassing the $40,000 threshold. However, examining the sentiment of the futures market can provide important insights into the health of the ongoing development and the potential direction of Bitcoin’s price in the near future.
The chart under consideration illustrates the measure of funding rates, a representation of the sentiment of traders in the perpetual futures market. Positive funding rates indicate the dominance of high position traders, willing to pay funding to short traders. Conversely, negative funding rates reflect the prevalence of short position traders who are willing to pay long traders.
Remarkably, this metric always shows positive values at the same time as the price rises above the $40,000 mark. This suggests a significant bullish sentiment in the futures market. While a positive sentiment is generally considered favorable, it raises concerns about the possibility of a long-term squeeze event if this pattern continues. A long-squeeze event occurs when a rapid downward price movement forces traders with long positions to exit their trades, causing a temporary cascading effect.
Close monitoring of funds rates will be important to assess the continuation of strong sentiment and to identify any potential risks, such as a long-term squeezing event.
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