After plunging as low as $8,600 on June 2nd, Bitcoin has bounced back to $9,700, reclaiming support level after support level. It’s a move that has had convinced analysts that more upside is in the works.
One trader said that as long as Bitcoin holds $9,600, which he marked as a notable level on a short-term perspective, he sees no clear reason “why $11,000 would not be next.”
Galaxy Digital chief executive Mike Novogratz shared in the optimism. He told BitMEX’s chief executive Arthur Hayes that if BTC didn’t head higher from the $9,700 range, he would buy him steak dinner next time they were in Tokyo.
Higher. I’ll bet you dinner.
— Michael Novogratz (@novogratz) June 4, 2020
Though a key indicator suggests that the bull trend is over — or at least it’s almost over.
Bitcoin Bull Trend Is Finally Topping Out
Bitcoin has shown extremely impressive strength since the lows seen in March of $3,700.
Even after a harsh rejection at $10,500 that liquidated dozens of millions, the cryptocurrency is still up more than 160% from the March lows. This means that over the past few months, BTC has outperformed basically any other multi-billion-dollar asset on a public market.
Impressive, truly, but the Bollinger Bands are showing that the rally may soon come to an end.
One trader shared the chart below on June 6th with the following comment:
“What’s the difference between the top at 19k, 13k, 10.5k and now?”
What he’s referring to is the fact that Bitcoin is nearing the top of the Bollinger Bands (shaded in turquoise in the chart below).
The last time this happened was in February of this year, which was when prices topped at $10,500 before plunging to the March lows. The time before that was when Bitcoin topped at $14,000 in June. And the time before that was at the peak of 2017’s crypto bubble, when BTC saw a brutal crash after hitting $20,000.
Should Bitcoin follow historical precedent, the rally will continue but will end as soon as BTC begins to interact with the top of the Bollinger Bands, currently at $11,000. The analyst explained:
“Based on the last 9 times price cleared and closed multiple weeklies above the middle of bbs, the price has not topped until it taps the top BB. So we haven’t finished this up move.”
Technical analyst John Bollinger, creator of the Bollinger Bands himself is bearish on Bitcoin at the moment. He wrote earlier this week:
“The is a Head Fake at the upper Bollinger Band for $btcusd, time to be cautious or short.”
Other Technical Signs Corroborate This
Other technical signals corroborate the sentiment that Bitcoin will soon begin to reverse lower.
An analyst identified three such signs last week:
- The Tom Demark Sequential has printed a “9” candle, which is often seen at the reversal points of trends.
- There are hidden bearish divergences between a momentum indicator and Bitcoin’s price.
- The Stochastic Relative Strength Index (RSI) has seen a bearish cross for the first time since February.
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt