Bitcoin (BTC) has had a bullish start to the week, but the momentum could wane in the next few days, technical studies indicate.
The leading cryptocurrency rose to a two-month high of $8,130 on Bitfinex today, having witnessed an inverse head-and-shoulders breakout last week.
The 40 percent rally from the seven-month low of $5,755 reached on June 24 has put the bulls back in a commanding position. Hence, further gains could be on the cards, albeit after a brief pause or a price pullback as a key technical indicator is flashing overbought conditions.
At press time, BTC is changing hands at $8,100 on Bitfinex.
Notably, the relative strength index (RSI), one of the most widely used momentum indicators, jumped above 70.00 (overbought zone) earlier today and is currently located at 74.56 – its highest level since December.
So, it could be said that bitcoin is at its most overbought level in seven months.
As a result, the cryptocurrency may find it hard to gain a foothold above the immediate resistance of $8,140 (pennant resistance) in the next few days and could see a minor price pullback.
That said, a technical correction, if any, will likely be short-lived as the other tools are biased towards the bulls. For instance, the 5-day and 10-day moving averages (MAs) are trending north, indicating a bullish setup.
Meanwhile, the short duration charts are also calling a further price rally.