Bitcoin faces big resistance

Bitcoin is trading above $40,000 and is challenging both a downward sloping resistance and the horizontal resistance at $42,000. Bulls need to be cautious as there are some warning signs that the week might start with a pull back.

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Red lines - resistance

Bitcoin has reached an important resistance area that justifies a rejection and pull back in order to gather strength for more upside. The scenario where price breaks this resistance now has for me the lowest chances of success.

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Blue line- bearish divergence

Red lines- wedge pattern

Bitcoin is forming a wedge pattern and at the same time the RSI is warning bulls with a bearish divergence signal. This is not a reversal sign but only a warning that the upside trend is weakening. Support is at $39,700 and breaking below it will be a sign of weakness. The most probable scenario for me would be for price to continue inside the wedge towards $43,000-$44,000 and then break the wedge for a pull back towards $36,000.

The material has been provided by InstaForex Company - www.instaforex.com

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