Tired Bull?: Bitcoin Run-up Showing Signs of Exhaustion
After an overly-exuberant run-up, the Bitcoin bull seems to finally be showing some signs of exhaustion.
After hurdling over previous resistance and marking a fresh all-time high of $7,454 on November 3rd, the cryptocurrency began showing its first signs of weakness as it struggled to maintain itself around the $7,400 level.
In fact, almost immediately after reaching its previous all-time high, Bitcoin experienced a slight pull-back to the $7,000 level and bounced off of its 10-day moving average with decent upward force.
Since then, the cryptocurrency has rallied upward toward new highs, marking a milestone at the $7,608 price level.
While Bitcoin’s next hard-fork is still well under way and isn’t occuring until mid-November, investors should still be on the lookout out for the cryptocurrency’s next correction.
When looking at BTC’s long-term trend on the daily chart above, it is clear to see that it may just be in the beginning stages of preparing for a pull-back (the BTC/USD exchnage rate is now well above its long-term channel and beginning to weaken after several exuberant run-ups).
As of currently, the BTC/USD rate is resting slightly above $7,500, and is showing signs of stability around this price level.
However, the 4-hour chart above is showing a few important signals:
1. Doji candle formed around its previous all-time high (unconfirmed)
2. Over-extended Moving-Average Convergence/Divergence Indicator (MACD)
3. Over-bought Relative Strength Index (RSI)
Formed when a tradeable asset or security has the same or nearly the same closing and entry price, a Doji candle is a neutral indicator that often refers to bearish or bullish exhaustion in terms of price action. In the case highlighted above, BTC experienced a Doji candle stick at the very peak of its rally, suggesting a strong possibility of an exhausted bullish trend.
However, while a Doji bearish reversal was almost confirmed with its pull-back below its 10-day moving average, BTC was able to successfully bounce off this price level ($7,000) and rally toward a new all-time high of slightly above $7,600, confirming the Doji candlestick to be irrelevant.
Nonetheless, indicators such as the MACD and RSI are still extremely over-extended, and are beginning to signal the possibility of bearish momentum in BTC’s short-term future.
Conclusion
Therefore, although BTC is expected to continue rising in value prior to its next hard-fork, Segwit2x, technical indicators are signaling that it may just be nearing the tip of its iceberg.
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