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Bitcoin retests 2019 highs; next up, $10,000 or $9,465?

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Bitcoin’s sideways movement finally ended when its price bottomed ($9,080) by the end of 4 February 2020. The price rallied after this bottom, pushing past the band of resistance and retesting the October 2019 highs of $9,700. At press time, this resistance had been tested twice and has not been breached yet.

The Dichotomy

Source: BTC/USD on TradingView

Scenario 1

Since Bitcoin is facing resistance, there are two obvious ways how this scenario will play out – a breach or a rejection. The breach of the resistance will take a lot of bulls acting in unison. However, the problem here is that the RSI has already hit the overbought zone. Breaching the $9,600 level would mean that bulls need to push through the overbought zone and stay there, very similar to what transpired between January 26 – 27, 2020. The MACD indicator highlighted that the momentum is going for another bullish crossover, furthering the above-mentioned scenario.

Source: BTC/USD on TradingView

If there is a breach, this would put BTC on a rally to $9,800 and $9,900 (Target 1), where it will face minor resistance. Following this would push BTC to a very important psychological level – $10,000, a level where it would face more resistance, much like it did when breaching the $9,000 level.

Scenario 2

If the price fails to breach the $9,600 level and the RSI starts to drop, this would indicate a failure of bulls. The eventual onslaught of bears would push the price of BTC down by 2%, causing a retest of $9,465 (Target 2). This is where the bulls will once again come into action.


Source: Skew

For scenario 2 to manifest, the Open Interest (OI) must drop from $1 billion. Failure to do this would establish $1 billion as the new normal. As mentioned in previous articles, there was a rejection trend after the OI would hit $1 billion. However, this seems to be changing.

As seen above, the OI was slumping but was just above the $1 billion mark.

Conclusion

At press time, Bitcoin seemed to be pumping and had already reached $9,800, where it was facing resistance. If the bulls continue to push through, $10,000 by the end of today seems more than possible. However, the above scenario seems less likely; a drop from $9,800 would definitely take it to target 2 ($9,465) in the next 24 hours and this would mean a reset of the OI, RSI, and even MACD.


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Akash is a full-time cryptocurrency writer and an analyst at AMBCrypto. He is an engineering graduate with an avid interest in finance and economics. Attracted to the chaos of trading, Akash has invested in BTC, ETH and XRP for educational purposes.
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