- Advertisement -

Bitcoin made a solid break above the falling wedge pattern top to signal that further gains are underway. However, it has yet to contend with the top of a newly-forming descending channel on the 4-hour chart.

A break past the resistance could add confirmation that a reversal from the slide is gaining traction. Price would also need to close above the 200 SMA dynamic inflection point around $4,100 to signal an uptrend. Bitcoin has already closed above the 100 SMA as an early hint of bullish momentum.

RSI is already indicating overbought conditions or that buyers are starting to feel exhausted. In that case, the channel resistance could hold as a ceiling and send bitcoin back to support. The mid-channel area of interest might also keep losses at bay since it lines up with the 100 SMA dynamic inflection point.

Stochastic is also in the overbought region and looks ready to turn lower. Stronger selling pressure could bring bitcoin back below the broken wedge top and onto a test of the bottom of the channel closer to $3,000.

Crypto traders seem to be in positive spirits, though, as another flush of green has taken over the charts and could still inspire a decent rebound before the year closes. Some say that the Santa Claus rally is already starting to take effect early in crypto markets, even as stock markets closed deep in the red.

Also keep in mind that this week marks the anniversary of bitcoin reaching its all-time highs. The gains may have also been caused by profit-taking on dollar positions leading up to the Fed decision as the central bank is expected to hike but signal slower tightening later. Still, the lack of any actual developments that spurred the bounce could keep buyers cautious and eager to book gains at nearby resistance levels.