Cautiously Bullish: Bitcoin Price Faces Key Hurdle Above $7.1K

Bitcoin is looking north, having scaled $7,000 on Tuesday, but its close proximity to a key resistance zone and the short-term overbought conditions are calling for caution on the part of the bulls.

The leading cryptocurrency jumped to a three-week high of $7,128 on Bitfinex yesterday and closed well above the 100-day moving average hurdle, signaling a continuation of the rally from the Aug. 14 low of $5,859.

As a result, BTC may have a tough time scaling the immediate resistance zone of $7,160-$7,180 in the next 24 hours and could suffer a minor pullback before extending the ongoing rally.

As seen in the above chart, BTC's convincing move above $7,000 has bolstered the already bullish setup as indicated by the higher highs, ascending 5-day and 10-day moving averages, and the bullish crossover between 50-day and 100-day MA. The cryptocurrency has also found acceptance above $6,870 and the relative strength index has moved well above 50.00.

It seems safe to say that for BTC, the path of least resistance is on the higher side, although a break above the resistance zone of $7,160-$7,183 could remain elusive for 24 hours or so.

The RSI is located above 70.00, signaling overbought conditions.

Another cause for caution is the 4.7 percent drop in the BTC/USD Longs on Bitfinex yesterday, which indicates the break above $7,000 failed to entice the bulls.

It is the unwinding of shorts, as seen in the chart above, that is likely driving BTC higher.

View The bull grip has strengthened, courtesy of BTC's convincing move above $7,000, although the immediate resistance at $7,160-$7,180 will likely prove a tough nut to crack in the next 24 hours as the cryptocurrency is looking overbought on the short-term charts.

Traders should watch out for a rebound from the ascending 5-day and 10-day MA. A move above $7,180 would open up upside toward the next major resistance at $7,330.