The Bitcoin price reached a high of nearly $98,000 on Tuesday, but has since retreated to the $94,500 breakout level. A distribution phase has occurred over the past couple of days. The question remains whether Bitcoin will advance to $100,000, or if further sideways or downward price movement will precede such a surge.
BTC Price Consolidates After Breakout
Despite some on social media suggesting a potential failure of the BTC rally and a return to an early-stage bear market, the short-term chart may indicate a different trajectory.
As long as the $94,500 horizontal support level holds, the current breakout remains valid. While many may have anticipated an immediate surge to $100,000 post-breakout, the bulls had exerted significant effort to achieve this breakout. Consequently, a period of consolidation was necessary for upside price momentum to rebuild.
Although the BTC price has fallen below the ascending trendline, this movement has served to reduce excessive speculation and allow the price to stabilize before potentially climbing higher.
Observing the indicators at the bottom of the chart, the 4-hour Stochastic RSI has reset. The 8-hour and 12-hour indicators have begun their descent. By the weekend, the price could potentially regain significant upward momentum.
RSI Breakout Potential by End of January
The daily chart suggests a potential initial consolidation phase on the path toward $100,000. The key to price movement in this instance lies within the Relative Strength Index (RSI) displayed at the bottom of the chart. It is evident that the indicator line appears to be encountering resistance from a 14-month trendline that extends back to November 2024. It is also important to consider that bearish divergence has developed as this trend has declined, while the price action has risen.
With the recent upward price movement, an uptrend line is observed to be forcing the indicator into a tightening range against the descending trendline. The indicator is expected to break out in one direction or the other, possibly before the end of January. An upward breakout could trigger a significant surge in the BTC price action, whereas a downward breakout could signal the end of the current rally.
Weekly Time Frame Confirmation for Breakout
The weekly time frame for BTC presents a bullish outlook. While certain indicators might suggest this is merely a bear market rally, maintaining a simplified approach is often beneficial.
The price is breaking out of an ascending triangle, a pattern generally considered bullish. If the price remains above this level by the end of the week, the subsequent weekly candle could confirm the breakout on this higher time frame.
At the bottom of the chart, the Stochastic RSI indicators are signaling strong upside price momentum. As long as both indicators remain above the 20.00 line by the end of the week, this momentum is likely to translate into price appreciation.