Bitcoin Bears Eye Possible Pullback to This Key Support Area, But Longer-term BTC Price Outlook Remains Strong

cryptonews.com:

Risks of a short-term pullback in the Bitcoin (BTC) price appear to be rising, according to chart analysis.

Bitcoin was last changing hands close to $27,500, about 6% below the nine-month highs it hit on Friday in the $29,300s.

The cryptocurrency’s repeated failure to hold above resistance in the form of the late-May 2022 lows in the low-$28,000s this week has gotten some traders worried that a short-term pullback to key support in the mid-$25,000s might be incoming.

And Bitcoin’s failure to hold above $28,000 isn’t the factor suggesting an increased risk of a short-term pullback.

In recent days, Bitcoin’s 14-day Relative Strength Index (RSI) has experienced bearish divergence.

This is where despite a continued rise in the Bitcoin price, the RSI has been falling. Some technicians view this as indicative of an incoming correction.

Moreover, Bitcoin’s latest push into the upper-$20,000s pushed an indicator of price momentum to historically high levels, signifying a potentially overheating market.

Earlier this week, Bitcoin’s Z-score to its 200-Day Moving Average (DMA) rose above 3.0.

That means the price was more than three standard deviations above its average over the past 200 days, a highly rare event that could signal that upside momentum is getting overstretched.

Bitcoin’s Z-score to its 200DMA was last around 2.5, still very high by historical standards and its highest since early 2020.

So, the risk of a short-term pullback appears to have risen. But Bitcoin bulls shouldn’t fret too much.

That’s because the fundamental narratives that drove the spectacular bounce from mid-March lows under $20,000 are likely to remain tailwinds for the foreseeable future.

Readers will recall that three US banks went under earlier this month,