The bitcoin price rally reached close to $500 today. Advance is strong and has left the indicators tilted, yet technical tools such as support and resistance and moving averages allow traders to determine targets and likely entry and exit levels.
That today’s 1-day price candle will confirm the $470 resistance as definitively broken, is not a maybe: it stretches green from $470 to $497 in the Bitstamp chart. OKCoin’s 3-month futures contract reached to $540 earlier today and the CNY charts have thundered past their November 2015 high.
The past two days’ advance has been unusually strong, and this raises some concern for a looming pullback, although the rally is (according to the 1-day chart indicators) far from over.
Our usual 1-hour reference chart has all of the momentum indicators in either severe overbought state or in advanced divergence. As we’ve seen, this is often the case during bitcoin price rallies and we have to revert to rudimentary technical tools such as support and resistance and moving averages to navigate bitcoin price waves.
A few weeks ago it was illustrated how there are major support and resistance zones around $550 and $680 in the Bitstamp chart. Once the market has negotiated and advanced above $500, we’d expect $550 to be the next major reaction zone for the larger trend.
Bitcoin price capitulated the swift clean break above $470 resistance by advancing to near $500. This level may pause price advance for a day or two. Also bear in mind that we’ve not yet seen $470 tested in the 1-day chart. Once above $550, the next major support and resistance level waits at $550 (Bitstamp).