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Warning signals point to potential drop to $60,000; flipping resistance into support is key
Analyst Josh from Crypto World recently revealed that Bitcoin is currently facing rejection from a critical resistance level and is simultaneously flashing short-term warning signals. This suggests that fresh liquidations may be on the verge of being. Here is a breakdown of his analysis:
Current Bitcoin Market Behavior
Starting with the Bitcoin 4-day chart, there has been no significant movement over the past day. Looking at the Bitcoin daily chart, we see a period of sideways consolidation, with choppy price action mirroring the US Dollar Index (DXY). The DXY’s neutral position means it is not having much of an impact on the price of Bitcoin.
Historically, a bearish DXY signals a bullish outlook for Bitcoin, while a bullish DXY tends to be bearish for Bitcoin. Currently, the DXY has not confirmed a bullish trend reversal and remains in a bearish trend, which is a positive sign for the trend and momentum of Bitcoin. However, it is important to note that short-term pullbacks can also occur within an uptrend.
Critical Resistance Levels
Bitcoin is currently experiencing a short-term rejection in the resistance zone between about $67,000 and $68,000. The upper limit of this resistance is just above $68,000, as evidenced by the volume profile which shows substantial trading volume around these levels.
If Bitcoin can break out of this resistance with confirmed daily candle closes and potentially flip it into support, the next major resistance is between $72,000 and $74,000. However, if Bitcoin faces further rejection from this resistance, a major support is expected between $63,000 and $64,000.
A break below $63,000, especially down to or below $60,000, would signal a bearish trend reversal. Another bearish indicator would be a bullish reversal in DXY, which has not yet occurred.
Short-term warning signs
The daily chart of Bitcoin reveals a confirmed bearish divergence on the six-hour chart, where higher highs in the price are met with lower highs in the Relative Strength Index (RSI). A bearish divergence typically signals a loss of bullish momentum and can lead to a sideways consolidation or a short-term pullback.