Bitcoin Rallies From Oversold Levels; Resistance Nearby

Bitcoin (BTC) buyers were active over the weekend as the cryptocurrency broke above the 50-day moving average near $34,000. The intermediate-term downtrend is reversing, although resistance near $40,000 could trigger some profit taking.

Upside momentum is improving after several months of consolidation and multiple oversold readings on the charts. Bitcoin was trading around $38,000 at press time and is up 10% over the past 24 hours. Early Monday, the price climbed to about $39,500.

• The relative strength index (RSI) on the daily chart is approaching overbought levels for the first time since April. This could precede a brief period of profit-taking near the 100-day moving average at $40,000.
• The weekly RSI is not yet oversold, although selling pressure from May is starting to slow.
• Price action is consistent with previous rallies from $30,000 support, albeit more persistent given the break above the 50-day moving average.
• Bitcoin remains in a consolidation phase until price moves above $40,000, which is the top of a two-month range. Initial support is seen around $34,000, which could stabilize a pull-back.