Bitcoin Surges After Retracing To This Fibonacci Level: What’s Happening?

Bitcoin BTC/USD took off flying beginning at 1:20 p.m. EST Wednesday, surging up 6.26% between that time and 3:30 p.m. EST, when the crypto banged into resistance near the $24,200 mark.

In total, Bitcoin is trading up about 8.5% from Tuesday’s closing price.

The apex crypto then started to consolidate under that resistance level with a series of inside bars on the five-minute chart.

On smaller time frames, Bitcoin may be forming a bull flag pattern under resistance in order to gather the strength to break higher.

On the daily chart, Bitcoin negated its most recent downtrend with the spike higher, by printing a higher high. Eventually, the crypto will need to retrace to print a higher low, which would then confirm a new uptrend.

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The Bitcoin Chart: If Bitcoin closes the trading day near its high-of-day price, the crypto will print a bullish Marubozu candlestick, which could indicate higher prices will come again during Thursday’s 24-hour trading session. If the crypto runs into sellers and closes the session with a significant upper wick, it could indicate lower prices are on the horizon, which could come in the form of an inside bar.

• A retracement is likely to take place because Bitcoin’s surge caused its relative strength index (RSI) to spike back up toward about 66%. When a stock’s or crypto’s RSI reaches or exceeds the 70% level, it becomes overbought, which can be a sell signal for technical traders.
• Technical traders may have seen higher prices on the horizon because when Bitcoin retraced between Feb. 2 and Feb. 13, the crypto bounced up from the 0.382 Fibonacci retracement level, which is healthy. Bullish traders and investors will want to see Bitcoin trade up toward the $25,000 level in the near future to avoid the crypto forming a bearish double top pattern at Feb. 2 high-of-day.
• Bitcoin has resistance above at $24,206 and $25,772 and support below at $22,729 and $21,313.

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