Bitcoin set to brush against the $27.8k resistance again, will recent history repeat?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- The $28k area had a confluence of resistances from multiple technical fronts.
- Beyond that, the $30k mark was also a bearish stronghold to watch out for.
On-chain metrics showed increased selling pressure behind Bitcoin [BTC] in May, which was partly due to investors realizing their profits from earlier purchases. However, the report noted that the exchange supply sank recently which likely suggested selling pressure might not continue.
Read Bitcoin’s [BTC] Price Prediction 2023-24
The price action of BTC showed that the $27.8k and $28.3k levels will be important resistances for bulls to beat. Bitcoin bulls must exercise caution upon a retest of this resistance and can brace for a downward move based on the recent trend.
The market structure remained bearish and the $28k area could pose significant opposition
In May, Bitcoin was in a downtrend. It began with a sharp drop below the $28.7k mark on 1 May, which shifted the market structure to bearish. Following this move, the price set a series of lower highs and lows.
One such lower high formed on 10 May when Bitcoin bounced to $28.3k before slumping to the $25.8k mark on 12 May. At the time of writing, the BTC bulls flipped the $26.8k level to support once more.
Yet, they need to force an H4 session close above $28,330 to flip the bearish market structure to bullish. A bearish order block on the 4-hour chart was present in this area, highlighted in red.
The past five days saw reduced volatility. The Directional Movement Index saw the ADX slip below 20, to indicate the absence of a strong trend.
On the other hand, the RSI stood at 57 while the CMF was above +0.05 in recent hours to show significant capital inflow into the market.
The indicators were not completely in disagreement, and the inference is that Bitcoin does not possess a strong trend in either direction at the time of writing.
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Open Interest charts showed strong bearish sentiment over the past week
On 17 May, when Bitcoin began to plunge from $27.1k to $26.6k, the Open Interest rose by close to $220 million, according to Coinalyze data. This showed intensely bearish speculators. Moreover, the OI began to drop when Bitcoin prices rose back above $27k, which showed short covering.
The spot CVD was in a steady downtrend over the past week but began to flatten over the past two days. This might not be enough to drive a rally, but it was something to watch out for.