The cryptocurrency market continues to foster optimistic expectations as the total market value follows an upward support trend line since October. A recent surge over this trend line on December 18 led to a bullish trend, culminating in a new annual high of $1.65 trillion on December 24.
The upward movement in the total market value has caused a breakout above the $1.60 trillion resistance area, which is both a horizontal zone and the 0.382 Fibonacci retracement resistance level. This breakout indicates a potential support level for the market.
However, the Relative Strength Index (RSI) is showing signs of a downturn, raising concerns among investors. The RSI is used as a momentum indicator to determine overbought or oversold conditions, aiding in the decision to accumulate or sell an asset. Levels above 50 suggest that investors are still in a favorable position, while levels below 50 indicate the opposite.
Despite the RSI level continuing to rise and being above 50, a bearish divergence is forming. This divergence occurs when an increase in value is accompanied by a decrease in momentum. Nevertheless, if the total market value does not close below $1.60 trillion, the trend may still be considered bullish. The next resistance level is 15% above the current level at $1.87 trillion.
Despite this bullish forecast, a break below the rising support trend line could lead to a 13% drop to the $1.41 trillion level, which corresponds to the 0.382 Fibonacci retracement support level.
Similar to the total market value, Bitcoin‘s price has also been increasing along an upward support trend line since October. However, unlike the total market value, Bitcoin did not reach a new annual high but instead formed a lower peak on December 22 and declined. Bitcoin is currently trading on the long-term upward support trend line. If resistance is broken, Bitcoin could fall 14% to the $37,200 level, the 0.382 Fibonacci retracement support. Conversely, a bounce off the support trend line and a breakout from the channel could trigger a 17% increase to the next resistance at $50,000.
