Bitcoin has staged an impressive rally after bouncing off the $102,000 support level and former triangle top, signaling strong bullish momentum following a sharp pullback.
The cryptocurrency appears to have invalidated a previous bearish pattern and is now targeting higher levels as momentum indicators turn increasingly positive.
Breakout And Retest
BTC/USD has successfully cleared the 0.382 Fibonacci retracement level at $104,338 and continued upward through the 0.5 level at $105,002 and the 0.618 level at $105,666. Most significantly, price has broken above the 0.764 Fibonacci level at $106,487, indicating robust buying pressure.
The cryptocurrency is currently trading around $106,654 near its $106K highs early this week, with the next major target being the full Fibonacci extension at $107,815.
Recent price action shows a series of higher lows and higher highs, confirming a reversal from the previous consolidation phase. What’s particularly noteworthy is how price has broken above the downward trendline that had been capping gains since around the 10th of May. This breakthrough suggests that sellers have lost control and buyers are now dictating market direction.
Additional Bullish Momentum
The moving average configuration supports the bullish outlook, with the 50 SMA (red line) crossing above the 200 SMA (blue line), forming what traders call a “golden cross” – a significant bullish signal. Both moving averages are now sloping upward, which typically indicates strong upward momentum in the price.
The stochastic oscillator has risen from oversold territory and is now approaching the overbought zone, showing strong bullish momentum. While this might suggest some near-term consolidation is possible, the overall direction of the indicator remains upward. The stochastic has not yet shown any bearish divergence, suggesting that the rally still has room to continue.
The MACD indicator (represented by the purple line in the lower panel) has turned decisively bullish, crossing above its signal line and forming a widening gap. This indicates accelerating upward momentum and often precedes significant price advances. The histogram bars are growing taller, further confirming the strength of the current move.
From a volume perspective, the recent green candles appear to be accompanied by increased trading activity, suggesting genuine interest in Bitcoin at these elevated price levels. This volume validation makes the breakout more credible and increases the likelihood of further advances.
If Bitcoin can maintain momentum above the 0.764 Fibonacci level at $106,487, a test of the 1.0 level at $107,815 appears highly probable in the near term. Should this resistance be overcome, the path would be open toward retesting the December 2024 highs around $109,800 mentioned in the historical analysis.
However, traders should remain cautious of any reversal candlesticks forming near the current price levels, as Bitcoin has shown volatility in the past. A daily close below the 0.618 Fibonacci level at $105,666 might signal that the rally is losing steam and that a deeper correction could be in store.
