This is a daily technical analysis by Coindesk analyst and chartered market engineer Omkar Godbole.
Bitcoin Consensus
One way to identify such levels is to use the trendline, the price chart line that connects the main highs and lows. They provide visual clues about momentum and direction, helping traders identify levels of support and resistance.
Connecting the 2017 Blu Market’s highest high to around $20,000 and the 2021 high to around $70,000, and moving the line forward will help highlight the level of sales pressure being generated.
At the time of writing, this trendline shows that the resistance is around $115,300, according to the data source TradingView.
Linear scaling monthly chart for BTC. (tradingView/coindesk)
The same trendline closed upside down in December and January, paving the way for a correction that saw prices fall to a $75,000 drop in April.
Log Scale Resistance at $220K
That said, the chart above is a monthly chart of linear scaling or arithmetic scale. It shows absolute price changes, a feature suitable for analyzing short-term trends.
However, potential resistance prices may be less reliable than those derived from long-term charts.
Connecting the 2017 and 2021 highs on the log-scaled monthly chart, the resistance lined up at around $223,000 instead of $115,000. Log-scale trendline resistance could be more consistent with Bitcoin’s past bull market exponential growth patterns.
BTC log scaling monthly chart. (coindesk/tradingView)