Technical Analyst, Saxo Bank Group
Summary: Bitcoin and Ethereum are testing key resistance levels after a strong comeback. But they could be caught being range bound before break out
Bitcoin BTCUSD is close to test resistance at around 25K. A break above could extend the uptrend to next resistance at around 28K but would have potential up to the upper range of the Consolidation area at around 32,384.
However, RSI is showing divergence i.e., the past couple of days bullish market is not supported by the Strength Indicator. An indication of a sustainable push higher would be if RSI breaks above its falling trendline.
If Bitcoin is being rejected and slides back support at around 21,475 could be tested.
Ethereum ETHUSD seems range bound between 1,460 and 1,700. RSI is showing divergence but has broken above the falling trendline which could be an indication ETH is set to move higher but the crypto seems to be struggling to leave the range.
If ETH succeeds next resistance at around 1,790 and around 2K close to the 1.618 projection of the November sell-off.
A break below 1,460 down trend would resume with support at 1,318.
RSI divergence explained: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
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