The price of bitcoin has shown an impressive gain of strength lately, outperforming the global stock markets, despite a risk-off environment and a rising United States dollar. On August 20, bitcoin managed to retest the local highs at $48.1K and went on to make a strong 4-hour close above the resistance, resulting in a major daily close around $49,300.
Aggregate crypto exchanges volume came at $7.56 billion, notably above the 14-day average and the volume on the risk-off days. For the past seven days, 4-hour bearish divergence coupled with realized price distribution between $47-48K acted as the initial resistance and caused a short-term pullback to $43.9K, a highly confluent zone for retesting successfully short-term support.
Normally, bitcoin longs were liquidated on the way down, and the short positions started piling on. The five-day-long pullback registered net outflows on spot exchanges that majorly suggest that the price dip was being accumulated.
Weekly Charts Show A Bullish Bounce
For now, the price of bitcoin is following the perfect bullish scenario on the weekly timeframe, where bitcoin experienced a short-term pullback at the beginning of the week, the discovered local bottom, pushes higher into this weekend to make a solid weekly close at the highs.
That is a critical formation for mid to longer-term structure. If it makes a second weekly close above the 200-day moving average (currently at $45.7K) and 21-week (currently at $43.6K) will also authenticate the considerable technical buy signal that flashed in the past week.
In the available market charts, bitcoin almost backtested the 21-week moving average and later pushed higher also forming a bullish hammer candle on the weekly basis.
4-Hour Charts Show Strength
The current conditions, taking into account, the fundamentals, technicals, on-chain metrics, and momentum appear favorable for a break above the $50,000 soon. Based on the 4-hour momentum on the relative strength index (RSI) has formed a downtrend for more than a week, but started testing the trendline as bitcoin price was testing resistance at $48.1K
Spot crypto exchanges’ buying pressure and short liquidations helped in pushing bitcoin above resistance, helping bitcoin to form another higher high. For now, bitcoin has managed to break above the 4-hour downtrend on the relative strength index (RSI), a short-term sign of strength.
The bitcoin price is now beginning the weekend above resistance, coming after the 4-hour bullish momentum, and on-chain metrics showing continuing strength with no significant spikes in spot exchange reserves or spot inflows.
It is critical for spot buying pressure to continue all through the weekend to absorb any incoming supply on the market. The $48K to $50K price area has some realized price distribution and some technical resistance. Once the supply at this price range gets absorbed, we expect to see a push higher, above the $50K mark.
The Next Major Resistance Zone Forms At $51.1-58k
Looking further ahead, the $51.1K to $58K region is a considerable zone of resistance that BTC must break above. That zone, mainly between $56-58K, has a much bigger UTXO realized price distribution when compared to the $47-50K zone.
Experts say that the $56-58k area is also confluent with a huge Fibonacci retracement zone forming at $57.1K. From then, we can expect on-chain and technical selling pressure at first. However, if the large buyers enter the market and manage to absorb all these blocks of supply, the path to retest all-time highs near $65K will seem to become smoother after $58K is reclaimed.
The recent rally that was seen from $43.9k to $49.4K gives the bulls an upper hand as the recovery continues.
As it has already been mentioned, in case of bitcoin manages to make a second weekly close above the 21-week successfully and also above the 200-day moving average, it will further authenticate the technical buy signal, and offer an enhancement to the higher time frame momentum to the upside.
In the short term, from the support levels side, the bulls need to protect the $48K psychological level on all pullbacks, continue to absorb supply, and begin testing the resistance at $50,000. If the markets manage to maintain bullish technicals and on-chain signals all through the weekend, it will be more likely that the bulls will push the markets above $50K.