Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Bitcoin has had a phenomenal year, with its price tapping new highs every day. At the time of writing, Bitcoin had just hit $29,300, a new all-time high for the cryptocurrency. This has been happening for a while now and it seems like the bull run is well and truly here. With the arrival of the holiday season and Bitcoin hitting new highs, it almost feels like déjà vu [referring to 2017].
The cryptocurrency’s price has been going parabolic for quite a while now, and more importantly, it has been invalidating trendlines willy-nilly. The same happened in 2017 too, and the same usually happens when a cryptocurrency’s price surges are a hyperbole.
Bitcoin 1-day chart
Source: BTCUSD on TradingView
Contrary to usual price analyses, this article will be different. The attached price chart has to be analyzed without any indicators to get a full picture of what’s happening. In this regard, the above chart shows that Bitcoin was in an ascending broadening wedge. Until 12 December, BTC respected this pattern and had a nice bounce off the lower trendline, a development that seemed to have sparked the bull run on the charts.
From this point onwards, BTC surged by a whopping 62.57%, shattering the pattern and ignoring many bearish indications on its charts,
- The pattern: Bitcoin broke out of the broadening wedge pattern due to immense buying pressure when it should have retraced after hitting a ceiling at $24,200
- Bearish divergence: As mentioned in a previous article, a bearish divergence developed after BTC hit the ceiling at $24,200. Regardless, BTC kept surging
- More invalidation: In an article dated 28 December, we had expanded on Bitcoin seeing weakened bullish indications, but disregarding these, Bitcoin surged another by another 9% to hit new highs
So, at this point, Bitcoin is invulnerable to any and all sellers due to the buying pressure. This pressure could either be holiday traders who are FOMO buying or residual pressure from institutions. It feels like it’s the former since the CME COT report highlighted a record short positions from leveraged funds [30,000 BTC].
Since we’ve established that bearishness isn’t allowed right now, let’s take a look at the indicators.
Source: BTCUSD on TradingView
The OBV was observed to have surpassed its 2017 volume levels of 1.73 million, with the same standing at 1.8 million, at press time.
The RSI indicator was in the overbought zone for the 15th day.
The Modified Stochastic RSI underlined a massive unfinished bearish crossover that was failing due to the recent price surge.
The Stochastic RSI briefly dipped below the overbought zone, but managed to head back in.
Conclusion
While the indicators were trying to head back into their normal states, buying pressure was keeping them from doing so. We can’t expect the price to keep doing this for a long time. This unsustainable surge will eventually stop and then retrace, contributing to a cascade of long liquidations.
Perhaps, we will see a scenario, one wildly similar to 2017, develop after Bitcoin hits $30,000. We might even begin 2021 like how 2018 began, with a bearish spinning top candlestick pattern.
The post appeared first on AMBCrypto
