Bitcoin Faces Initial Resistance at $46K; Support at $42K

Bitcoin (BTC) appears to be overbought on intraday charts, which typically leads to a short-term pullback in price. The cryptocurrency faces initial resistance near $46,000, which is the top of a three-month long trading range. Still, support between $40,000-$42,000 could stabilize pullbacks.

BTC was trading around $44,400 at press time and is up 5% over the past week.

On the weekly chart, BTC established a higher price low relative to the June 2021 bottom around $28,800. The latest cycle low was achieved this year on Jan. 24 at $33,100, indicating renewed buying strength. Further, momentum signals are on the verge of turning positive, which could support a short-term relief rally.

Stronger resistance is seen at $50,996, which is a 50% retracement of the prior downtrend. At that point, BTC’s rally could stall, similar to what occurred in September 2021. This time, however, seasonal strength between April and May could keep buyers active, albeit within a year-long trading range.

On the monthly chart, momentum signals remain negative. That means upside is limited because of strong overhead resistance emanating from the April and November price peaks.