Bitcoin has a good setup for a strong rally

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April was very good for bitcoin after the big red margin long cascade seen in March. The month closed above the red ones opening price. This is called an engulfing candle and is considered bullish. The monthly RSI at the bottom of the chart is also back above 50, in the bull market territory.

You can also see how well these yearly opening prices work from this chart. The rise from $3k stopped exactly at the $13880 open from 2018 and the big crash recently almost reached the 2019 open at $3693. Now we have climbed back above the 2020 open. This is all bullish.

In a previous analysis I wrote: ‘It’s on the brink of breaking the 2020 yearly open. If that happens, the price will pump to at least $8k, possibly even to $8.5-9k. If $10k breaks, we will see a crazy pump.’

On the weekly chart we see how the price is consolidating so far right at the average from 50 weeks (dotted yellow). After this average there are no other meaningful averages to stop the start of a stronger rally. We already saw weekly close above this average. After the big $3k bottom, a weekly close above this 50 week average added a lot of power to the rise, as you can see from the chart.

On the daily chart we see that the price has been rising after the average from 50 days (solid yellow) and 2020 open was broken. Daily averages from 100 days (solid blue) and from 200 days (solid red) were not big resistances and the price went straight to a more meaningful average from 50 weeks and is now consolidating mostly above it.

I think the price is heading at least to test the big $10k round number before possibly retracing and testing supports. If that $10k breaks with a close above $10.5k (dashed line) then the 2018 open at $13880 is the next resistance.

We have a good setup for a strong rally based on the fear and greed index, which has started rising. Most big longs have been swiped out and traders have been scared and fearful, since we started dropping hard the last time we were on these levels.

Why bitcoin is one of the best investments in the world today and why technical analysis works (simply explained)


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