Bitcoin is struggling at $34,500; what lies ahead?

TLDR

• Bitcoin's attempt to break out of a bullish pennant resulted in a rejection near the $36,000 level.
• Key horizontal support at $34,500 failed to hold, raising concerns about further downside.
• RSI on the daily chart has reset but is not out of the woods, possibly signalling a move to the low $33k range.
• Long-term buyers may consider dollar-cost averaging (DCA) purchases below $32,000 for BTC.

Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. “One Glance” by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. They are not signals, and they are not financial advice.

Technical analysis

Following the consolidation period in the bullish pennant, BTC broke out to the upside and quickly retested the $36,000 area before immediately rejecting. BTC is now back below the $34,500 horizontal resistance that you’d have liked to see flip into new support. Long story short, BTC is currently struggling at this level. 

We may see some support around the $33,300 level. However, the more major support to the downside is the $31,300 to $31,500 zone.  

RSI and funding rates

Bitcoin’s RSI on the daily timeframe has now reset somewhat and is no longer in overbought territory. If the bearish divergence fully plays out, this would likely see BTC test the low $33k.  

The funding rate is still positive, but it has pulled back substantially overnight on the BTC move down from $35,300 to $34,300 (current price). We saw yesterday how the funding rate was extremely positive, and open interest was high, which we said showed an overheated derivatives market, which is usually not positive for price, which has played out over the past 24 hours. 

This funding rate has reset somewhat, and open Interest has come down a tad but not too heavily - so there remains a lot of leverage which could see the door opened for the price to flush lower again.

BTC 1D

Cryptonary’s take

We were right yesterday to be cautious in our analysis. A failed breakout is never usually a good thing, and price usually continues lower. We also had an overheated derivatives market and a major bearish divergence on the RSI. 

We feel a move back to $35,500 may be on the cards, but considering the rejection of the breakout, we think the odds favour a more meaningful pullback to at least $33,300.

However, it’s hard to have a strong conviction. Therefore, on a zoomed-out timeframe, we’d be DCA buying sub $32,000 for BTC.  

Action 

Taking no action here, however, we will be buyers of BTC sub $32,000.