Resistance is futile so they say, but in the case of Bitcoin, resistance is key to any sustained moves higher.
Support and resistance is the first thing anyone involved with technical analysis should learn thoroughly. It’s often referred to as supply and demand.
When a price begins to fall there will be a level where the sellers dry up and there’s more demand from the buy side. Consequently price will begin to turn upward once again.
Usually this happens as a price approaches a previous low. Many are reluctant to sell into a medium or long term low, and often there will be buy orders stacked up waiting for a cheaper entry.
In the case of resistance price can stall as it approaches a previous high, or a test from underneath to a previous low. This type of action turns a previous support level (or low) into resistance. The sellers begin selling and supply outstrips demand.
Which leads us nicely to Bitcoin today.
Price has been slowly gaining ground over the last few days, as it was bought up from the re-test of the February low.
However, as you can see on the chart below Bitcoin stalled immediately as it hit the underside of the last lows in the downtrend.
This previous low has now turned into resistance. And it could end up being a really significant one.
For Bitcoin to make any serious gains and head back towards $10,000 then it must break this resistance and IMPORTANTLY hold above it.
If it breaks above but can’t find any demand from buyers I’d be very wary of the downside that could begin to follow.
The price is still in a bear cycle and that picture won’t change until Bitcoin manages to break above one or two resistance areas and continue climbing.
Don’t listen to anyone. Listen to the chart, it’s screaming at you.
The post Bitcoin Makes a New Resistance and it Could be a Tough One to Break appeared first on Crypto Trading Blog.
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