Bitcoin (BTC) Hits Key Descending Trendline: Will It Break Out?

With the announcement on Monday that Michael Saylors Strategy had bought 6,911 BTC, this was enough to push Bitcoin over $88,000 and for the price to tag the major descending trendline. The next task for the bulls is to force a breakout. Can they do it, or is this the last gasps of a relief rally, and a consequent rejection to a much lower level?

Strategy fuels the Bitcoin surge

Strategys newest Bitcoin purchase, at a price of $584.1 million, certainly helped Bitcoin to reach the heights of around $88,700 on Monday. Not only did $BTC attain this level, but it also touched the extremely important descending trendline which has been guiding the price down since the all-time high of $109,000.

The conundrum now will be whether the bulls will start backing off, given that short-term momentum indicators up as far as the daily time frame have hit the top, or whether market makers will continue to turn the screw on short traders and prolong the short squeeze.

$BTC price reaches the major descending trendline

Source: TradingView

The 4-hour chart for $BTC shows the price making higher highs and higher lows in the ascending wedge pattern. The last higher high corresponded with the descending trendline, and so a rejection here was certainly on the cards.

A retreat back to the bottom of the wedge could be the next move, although if the current resistance can be broken, another attempt could be made on the descending trendline.

Bulls battle with strong resistances

Source: TradingView

The daily chart displays the current resistance level at $87,300. It can be seen that the bulls are fighting to surpass this level and confirm above. With the major descending trendline just above, this is not going to be an easy task, and bulls would probably need to pierce through this line as well. If both tasks can be achieved, the route to $91,400 would be open.

At the bottom of the chart, the Relative Strength Indicator is displaying a recent cross up through the trendline. If the indicator line can confirm above, this would do a lot for the bullish case.

$BTC reaches pivotal moment in weekly chart

Source: TradingView

Its on the weekly chart that the current pivotal point can truly be appreciated. The descending trend needs to be broken, and therefore a weekly candle opening on the other side of the trendline will be crucial. The good thing, as far as the bulls are concerned, is that as long as the price stays roughly above $84,500, this should be achieved come next Monday.

Of course, there is a lot of water to pass under the bridge by then. Not least, the U.S. stock market will need to continue its recovery. If this box can be ticked, watch out for a potential rally back to the highs over the next few weeks. The Stochastic RSI at the bottom of the chart is likely to play a major role in signalling plenty of upside price momentum to come.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Text source: Crypto Daily™

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