Analysis: This is why Bitcoin can rise in the short term

Analysis: This is why Bitcoin can rise in the short term

Today is the fifth day of Bitcoin moving between $23,000 and $24,000. Price seems to be having trouble choosing a clear direction. If the price rises, bitcoin will likely retest the key $25,000 resistance. It has become clear in recent weeks that breaking through this resistance is not an easy task.

What are we discussing today?

In this analysis, we will first focus on Bitcoin’s current price position and relevant price levels. Next, we’ll discuss the dollar strength shown on the DXY chart. This chart has a big impact on the Bitcoin trend as it shows an inverse correlation. When the dollar rises sharply, the price of bitcoin falls (and vice versa). Since DXY is currently experiencing some resistance, this could have a positive effect on Bitcoin.

Bitcoin price on the 4 hour chart

After falling nearly 10%, the price found support. The diagonal green line on the chart below runs from bottom to top and has kept the uptrend intact so far. We are starting to see higher lows and the volume indicator is also positive. The black arrow indicates that the trading volume is increasing, which means there are more buyers with a rising price. This is a bullish signal.

Graph, automatically generated histogram description

However, it is important to remember that this is a low time frame chart. Even if it seems cheap now, that can change completely in a few days. So it’s good to keep that in mind.

The disappearance of the green line as support will lead to a sharp fall. Support levels such as $21,500 and $20,300 are being tested. Crucially on an upside, the price again tests resistance around $25,000 and this time the breakout. Not only on the 4-hour chart, but especially on the daily and weekly chart, it is important that candles close above this price level. This is further confirmation that the resistance has indeed broken and that we are not dealing with a bull trap.

The dollar gives room for bitcoin to rise

The dollar chart shows two negative signs. First, it faces resistance from the black line: the 50-week SMA. This is an indicator that summarizes and averages the last 50 weekly prices. This creates a line. In addition, the price is also facing resistance from the Bull Market Support Band (BMSB), another indicator in the chart below. When the price moves above this indicator, it acts as a support. But if the price falls below that, there is often resistance. The latter is currently the case.

Graph, automatically generated histogram description

The dollar is currently in a resistance area. A clear rejection of the resistance and the red candles that follow will benefit risky assets like Bitcoin due to the inverse correlation. When the price closes a weekly candle above both indicators, we should be cautious. After all, a bullish dollar usually means a weakened bitcoin.

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Source: Btc Direct

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