Bitcoin Seeking Gains After Retaking Key Price Support


View

  • The immediate outlook on bitcoin will remain neutral while prices are trapped in the range of $3,658-$3,900.
  • If bitcoin bulls can keep prices above the 5-week MA support at $3,703 we could see a rally above $4,000. The average is reporting bullish conditions for the first time since August.
  • A UTC close below $3,658 (Feb. 27 low) would revive the bearish view put forward by the high-volume sell-off on Feb. 24 and open the doors for a drop to levels below $3,400.

Bitcoin (BTC) has returned above crucial support at $3,700 and could bounce higher if it can defend that level.

The crypto market leader fell 2.4 percent yesterday to $3,670, raising the odds of the bears coming out victorious from the ongoing tug-of-war with the bulls in the range of $3,658-$3,900. Prices, however, are still trapped in that trading range. So, the immediate outlook is neutral.

Further, sellers are struggling to secure a convincing break below the widely-followed 5-week moving average (MA) located at $3,703.

It is worth noting that the 5-week MA is now trending north and is holding above the 10-week MA for the first time since August 2018, indicating the path of least resistance is to the higher side.

Therefore, a repeated defense of that MA could invite a wave of buying pressure, leading to re-test of recent highs near $4,200. As of writing, BTC is changing hands at $3,720 on Bitstamp.

Weekly chart

As seen above, the 5- and 10-week MAs have produced a bullish crossover for the first time in six months. The moving average convergence divergence (MACD) histogram is printing a strongest bullish signal in over a year.

Further, the money flow index has breached the upper edge of the channel, validating the bullish divergence confirmed in December.

Therefore, a strong bounce from the 5-week MA could yield re-test of $4,190 (last week’s high). A weekly close (Sunday, UTC) above that level would confirm a bullish reversal and open the doors to the psychological hurdle of $5,000.

Daily chart

On the daily chart, the 5- and 10-candle MAs are trending south, indicating a bearish setup. Prices, however, are still holding above $3,658 (low of the long-tailed candle created on Feb. 27).

A UTC close below $3,658 would put the focus back on the big bearish outside reversal candle charted on Feb. 24 and trigger a sell-off to levels below $3,400. The sell-off, however, could be short-lived, unless it is backed by a surge in trading volumes.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; charts by Trading View

LEAVE A REPLY

Please enter your comment!
Please enter your name here