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Bitcoin’s price has broken above a significant moving average which has been acting as a resistance over recent weeks. The market seems ready to rise higher in the coming week if the remaining negative factors do not hinder the forming momentum.
The Daily Chart:
On the daily timeframe, the price has closed above the 50-day moving average to the upside at last, after failing to do so and getting rejected multiple times over the last few weeks.
This breakout has seemingly paved the way for a rally toward the $18K resistance level and perhaps even higher. A break above the wedge pattern would likely lead to bullish price action in the mid-term, as it is considered a reversal pattern in a bear market.
However, if the price drops back below the 50-day moving average, the chance of declining toward the $15K support zone will increase accordingly.
The 4-Hour Chart:
Looking at the 4-hour chart, the fake breakout and bearish scenario seem more probable, as the price is yet to break above the $17K resistance area to maintain the formed bullish momentum.
Moreover, the RSI indicator shows a clear bearish divergence signal, which further strengthens the likelihood of a reversal in the short term.
An impulsive rejection from the current price level would likely lead to a drop toward the $15,500 support level, which would be the bulls’ last resort.
All in all, things are getting interesting from a technical point of view, as BTC’s behavior around the $17K mark in the next few days would likely determine the mid-term trend of the crypto market.
The following chart includes the Realized Price metric, one of the most valuable indicators to determine whether Bitcoin is under or over-valued. Typically, the price stays above the realized price during bullish market cycles. Conversely, during the last capitulation phase of a bear market, the price drops below the realized price, bringing significant fear and uncertainty. During this period, market participants are under much stress and distribute their assets to avoid additional losses and control their exposure to further market fluctuations.
Considering the previous cycles, the beginning of a bull market is anticipated once the market price surpasses the realized price. This has not happened yet, as the cryptocurrency has failed to break above the realized price, followed by a short leg down.
Consequently, the sustainability of any positive price action is questionable unless Bitcoin surpasses the realized price ($19.7K).