Since making a low on the month just above 216 bitcoin rebounded to 230 and start coiling as we can see in the 1H chart. Towards the end of April 21st session, btcusd started to uncoil upwards. Let’s take a look at the charts:
As we can see in the 1H chart, bitcoin not only broke above a triangle, it also charged above the 230 resistance. There was strong volume, and the 1H RSI popped up above 80. The price action suggests that the bullish breakout is very likely to extend. In the very near-term however, the RSI is overbought, so we can expect some intra-session pullback. So far after finding resistance around 237, the pullback has held above 232.
We can have more pullback and still be within the context of a bullish breakout scenario. However, price should not fall below 225, where the breakout rally began. This is also the middle of the cluster of 200-, 100-, and 50-hour simple moving averages (SMAs). If price falls towards 225, and stalls while the 1H RSI also stays at or around 40, the bullish outlook would still be in play, and we should anticipate a bullish continuation in the very short-term.
Since the prevailing trend has been bearish, we should limit the bullish outlook to the 250 handle, which is also a support/resistance area. However, if bitcoin remains bearish, it might find resistance earlier, just above 240. As we can see in the 4H chart, the 200-period SMA and a falling trendline is likely going to challenge bitcoin before it makes it to 250. Remember the only bullish signal at the momentum is the strength and volume of the current bullish attempt. This could be an indication of a start of a bullish trend, but it seems premature at the moment. If price does push to 250, we can have more confidence in the bullish trend, and should start limiting expectations of bearish moves, for example to 230, or at most to 225.
A return below 225 would mean a reversal from the current breakout and would be a strong indication that bears are still in charge. In this scenario, the pressure would be back towards the 216 low.
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