Bitcoin Skyrockets Above 3500

BTC/USD surged on Friday, breaking above the upper bound of a downside channel that was containing the price action since January 14th. On top of that, the rally brought the price above the 3500 mark, with the crypto hitting resistance near the key obstacle of 3700, before retreating somewhat. In our view, although both the daily and weekly charts still point to a broader downtrend, Friday’s rally may have increased the chances for some further recovery in the short run.

The crypto may continue its current setback for a while more, but if the bulls are willing to take the reins again from near the 3500 zone, or even the 3450 level, then we could see another recovery and another test near the key hurdle of 3700. In order to get more confident with further advances though, we would like to see a decisive close above that level. That barrier provided good support on December 31st and January 4th, while after its downside break on January 10th, it acted as a decent resistance on January 14th. Its break would confirm a forthcoming higher high on the 4-hour chart and may allow bullish extensions towards our next resistance zone of 3840, which is the high of January 4th, after which the price opened with a positive gap.

Looking at our short-term oscillators, we see that the RSI topped within its above-70 zone and just crossed below 70, while the MACD, although above both its zero and trigger lines, shows signs of slowing down. These indicators suggest that after the rally, the upside momentum has eased, which supports our view for some further retreat before, and if, the bulls decide to take charge again.

On the downside, we would like to see a clear dip below 3330 before we start examining whether the bulls have abandoned the battlefield. Such a move would confirm a forthcoming lower low and could signal the price’s return within the aforementioned downside channel. This could encourage the bears to aim for the 3270 zone, the break of which could carry more bearish implications, perhaps opening the path for the 3130 territory, near the low of December 14th, which is also the lowest point since September 15th, 2017.

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