During the week of Oct 19-26, Bitcoin (BTC) reached a close above $13,000. While the long-term trend is bullish, the short-term chart has begun to show weakness.
Whether the price breaks out or down from the current parallel channel will likely determine the direction of the short-term movement.
Bitcoin Bullish Weekly Close
During the week of Oct 19-26, the BTC price created a bullish engulfing candlestick with a body that measured 13.5% in magnitude. The weekly close of $13,039 was the highest reached since January 2018. BTC is still trading close to the long-term $13,500-$14,000 resistance level created by the wick highs of July 2019. However, it has already moved above the resistance area of $11,800, created by the weekly closes since February 2018 (shown with the dashed line below). Therefore, it’s possible that Bitcoin has already cleared a crucial resistance level, a hypothesis that would be strengthened by a sustained move above $13,500. It’s worth noting that the recent increase did not generate a bearish divergence in the RSI, since the recent RSI high was slightly higher than that on Aug 17. Furthermore, the Stochastic Oscillator is still increasing, so there is no weakness present yet in the weekly time-frame.

Short-Term Weakness
The shorter-term six and two-hour-chart shows the first signs of weakness in their trading structures. During the two most recent tops, the RSI has generated some bearish divergence and the price has created a shooting star candlestick. These are bearish signs that indicate a correction might soon follow. If it does, the closest support levels are found near $12,300 and $12,040, the 0.5-0.618 Fib levels of the most recent increase. The latter also coincides with a previous resistance area, which is now expected to act as support.

Disclaimer
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