Bitcoin (BTC) is up roughly nine percent today, at the time of this writing — but should you be excited? Probably not.
What is likely happening with the price of Bitcoin is what is commonly referred to as a ‘dead cat bounce.’ Such a bounce is a temporary recovery with positive price action on the way down. It is commonly caused by investors looking to make up for their losses or retail investors getting suckered-in to what looks like a positive reversal.
As displayed in the chart above, both the relative strength index and stochastic relative strength index are finally heading upwards after spending time in oversold levels. However, we expect the RSI to find rejection under 40.0000. The stochastic RSI should also touch overbought territory by that time and head down in quick fashion as BTC collapses on another leg down towards $3.5k or lower.
During this most recent collapse, the price of Bitcoin has found both support and resistance in the zone around $4.5k on the four-hour candlestick chart. Therefore, we find it unlikely that BTC will break through resistance at $4500. If it does, however, we can likely expect an accelerated move upwarsd to the big-even number of $5000 — where the chances of rejection are even more significant.
A quick move above $5000 would be ultra-bullish, as the next level of resistance would be back up around $6400. We’re not betting on this scenario playing out.
The four-hour stochastic RSI chart is also about to commence what appears to be a bearish cross (when the blue line crosses down through the orange line). This would suggest that BTC needs to cool off on the four-hourly timeframe. The standard RSI should touch overbought levels at the $4500 resistance previously mentioned — increasing the likelihood of a rejection.
What do you think about Bitcoin (BTC) and its current price action? How low will we go? Let us know your thoughts in the comments below!
Disclaimer: The author of this article holds Bitcoin (BTC). This is not financial advice, and should not be construed as such. It is for informational purposes only. BeInCrypto is not responsible for any financial decisions made by any readers. Trading in cryptocurrency is notoriously volatile and we recommend anyone interested consult with a trained financial professional.