Bitcoin (BTC) continues to show strength with multiple attempts to break above $ 16,000 November 12th. A new annual high was set during the day with a BTC price high of $ 16,150.
This annual maximum is more than 300% above the annual minimum of $ 3,800 in March. This is an impressive boost, especially when the altcoins are running out of life.
Even Stan printmiller confirmed this week that he bought bitcoin, in the hope that BTC will continue to outperform gold. This is another well-known institutional investor who is getting on the “Digital Gold” train.
But is another bullish continuation warranted in view of the great euphoria? The Fear and Greed Index is at a record levelmaking a correction almost inevitable in the short term.
Bitcoin tries the sixth weekly green candle in a row
The Bitcoin weekly chart shows the obvious resistance zone in the $ 16,000 region. It is the first time in almost three years that this level has been reached. Back then, Bitcoin’s price was declined by around $ 16,000.
Also, the sixth green weekly candle is currently being printed, which is certainly a bullish sign.
However, many levels below the current price were not tested this week. A healthy way to start a new cycle is Do a retrospective test of previous resistance levels as new areas of support.
For example, this retest did not take place in the $ 12,000 range. Hence, this is a level traders should watch out for as it can become a critical turning area.
Possible bearish divergence on the daily chart
The daily timeframe shows a possible breakout above $ 15,600. Such a breakout is likely to occur with large volume, which would indicate further strength.
However, the current outbreak lacks the volume This leads to a possible retrograde divergence and higher construction at this level.
In this regard, if the price of Bitcoin breaks south and loses the $ 15,600 level, Another correction seems inevitable.
If another correction is made, the values observed in the daily timeframe are $ 14,100, $ 13,100 and the zone between $ 11,600 and $ 12,000. The latter is also a potential area of support on the weekly chart.
The fear and greed index remains at a record level
The Fear and Greed Index is still at an extremely high levelAs the current level is 87 out of 100, it is the highest since June 2019, which marked the peak of the previous bull cycle.
The Fear Greed Index It is a useful tool for measuring market confidence.
When maximum values of 80+ are reached, A correction is more likely than a bullish continuation. This euphoria is usually short-lived as the market often moves in the opposite direction than most traders expect.
While institutions buying Bitcoin or serious investors claiming to own BTC are a very optimistic sign for the market in general, This does not mean that no correction can be made. In fact, these bullish cycle corrections are often viewed as healthy for the Bitcoin market.
In the previous bull market cycle in 2017 The BTC / USD pair saw multiple 30% declines, prompting a re-examination of previous resistance levelswho later became a stepping stone to the next level.
The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trade movement involves risk. You should do your own research when making a decision.