Bitcoin holds short-term support, faces resistance at $40k

Bitcoin (BTC) is stuck in a consolidation phase after a volatile May. A near 13% rise on Wednesday was short-lived as buyers took profit. There is strong resistance near $40,000 despite oversold readings on the daily chart.

Bitcoin registered a series of lower price highs over the past two weeks, although buyers have defended support around $34,000 and $30,000.

The cryptocurrency was trading around $37,500 at press time.

• The relative strength index (RSI) on the daily chart is improving from an initial oversold reading on May 19. This suggests the downtrend from May is stabilizing.

• However, there is strong overhead resistance which could limit price rallies beyond $40,000.

• The weekly chart is not yet oversold, although there are initial signs of downside exhaustion. This means buyers and sellers are at a stalemate until a decisive break above $40,000 or below $30,000 is confirmed.

• The longer-term trend is weakening following extreme overbought signals in March. For now, upside remains limited into the weekend given the intermediate-term downtrend.

Bitcoin daily chart shows support and resistance levels with RSI.
Source: TradingView