Bitcoin rally over?

The price of Bitcoin has skyrocketed about 50% so far this month to a high of $8390, following a 28% rally the month before. The crypto currency has surged past its 200-day moving average, all the way down at around $4440. In other words, BTC/USD would have to half from here to get back to this long-term moving average. The distance between it and this moving average makes it susceptible for a drop, as prices do tend to revert to the mean from time to time. In fact, Bitcoin is looking extremely ‘overbought' in the short-term. So, for the sake of healthy price action, Bitcoin will either need to correct itself or, ideally for the bulls, consolidate for a while before it makes further gains. Indeed, the Relative Strength Index (RSI) is already at extremely overbought levels around 80. In fact, Bitcoin was in the process of potentially forming a bearish outside bar candle on its daily chart, so this phase of the uptrend could come to an end. But zooming out, it is worth pointing out that Bitcoin has not even retraced to its shallow Fibonacci level of 38.2% at $9440 against its record high. So, this year's rally is certainly impressive but it does not necessarily mean the long-term bear trend has ended.

Figure 1: