Bitcoin (BTC) is showing signs of buyer exhaustion and could see a minor pullback unless resistance at $4,000 is scaled in the next few hours.
The crypto market leader witnessed two-way business yesterday before closing (UTC) on a flat note at $3,969 on Bitstamp. Essentially, BTC created a doji candle, which is widely considered a sign of indecision in the marketplace.
Notably, the fact that the doji candle has appeared close to the historically strong resistance of the 21-week simple moving average (SMA), currently at $4,073, suggests the indecision is predominantly among the bulls and could be considered a sign of buyer exhaustion.
So, a price pullback could be on the way, especially if support at $3,930 is breached in the next few hours. That said, the rally from the March 14 low of $3,775 could resume if prices rise above the resistance at $4,000, invalidating the doji candle.
As of writing, BTC is changing hands at $3,975, representing a 0.4 percent gain on a 24-hour basis.
Daily and weekly charts
On the daily chart, BTC looks to be creating the right shoulder of an inverse head-and-shoulders pattern, having bounced up from the rising trendline last week. The 5- and 10-day MAs are also trending north, indicating a bullish setup.
Even so, the rally has stalled near $4,000 and a doji candle has appeared, validating the bearish view put forward by the descending 21-week SMA, currently at $4,073.
BTC, therefore, risks falling back to the rising trendline support at $3,890. A break lower would expose the March 14 low of $3,775.
It’s worth noting that bitcoin may have a tough time scaling or holding onto gains above the 21-week SMA as long as that average is trending south.
Reference:
https://www.coindesk.com/bitcoin-faces-minor-price-retreat-amid-increasing-bull-exhaustion
