Bitcoin is trying to break above the $9,000 resistance level, but several technical patterns estimate that it is bound for a retracement. The following technical analysis evaluates where the flagship cryptocurrency could be heading next.
Bitcoin technical analysis
In the past 24 hours, Bitcoin surged nearly 5 percent after bouncing off the $8,600 support level. The upswing allowed it to move close to the $9,000 resistance level. This is BTC’s first attempt to break above this price hurdle.
Despite recent bullish impulse, the TD sequential indicator is presenting a sell signal on BTC’s 1-hour chart. This technical index estimates that the pioneer cryptocurrency could undergo a one to four candlesticks retracement or begin a new downward countdown. A red two candlestick trading below a preceding red one candle could confirm the bearish outlook.
Additionally, a bearish divergence is forming on BTC’s 4-hour chart. This technical pattern develops when the price of an asset appears to be reaching higher highs while the Relative Strength Index (RSI) is making lower lows. Although this bearish formation does not provide a precise selling point, it is a sign that the uptrend could soon reach an exhaustion point.
If Bitcoin is indeed bound for a correction, a spike in the selling pressure behind it could push its price down to the 78.6 percent Fibonacci retracement level at $8,550. Closing below this significant level of support would increase the probabilities for a steeper decline to the 61.8 or 50 percent Fibonacci retracement levels. These areas of support sit around $8,260 and $7,950, respectively.
It is worth noting that an increase in demand for Bitcoin around the current price levels could jeopardize the bearish outlook. If the pioneer cryptocurrency is able to close above $8,990 with enough volume, it would likely try to test the 113 or 127.2 percent Fibonacci retracement levels. These levels of resistance sit at $9,257 and $9,550, respectively.
Overall sentiment
In a recent Twitter poll conducted by crypto-focused economist Alex Krüger, over 75 percent of the 4,079 participants claimed that BTC will move above $14,000 this year. The overwhelming bullish sentiment amongst investors can be interpreted as a negative sign. The wisdom of the crowd is rarely correct, especially in the cryptocurrency market. Therefore, Bitcoin could be about to go through a steep correction that disappoints even the most optimistic investors.
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