Bitcoin continues to climb inside an ascending channel as it recently busted through the key $7,000 handle. Price is hitting a roadblock at the resistance, though, and might be due for a quick correction.
Using the Fibonacci retracement tool on the latest swing low and high shows that this broken resistance is close to the 61.8% Fibonacci level, which is also near the bottom of the channel. It’s also near the 200 SMA dynamic inflection point, which may be the line in the sand for a correction.
On the subject of moving averages, the 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside. In other words, this suggests that the rally is more likely to resume than to reverse. The 100 SMA is near the 50% Fib at the $7,100 mark while the 38.2% Fib lines up with the mid-channel area of interest.
RSI is still heading lower, though, so the correction could go on for a bit longer. Stochastic is moving down but closing in on oversold levels to reflect bearish exhaustion soon. Turning back up could lead buyers to return and allow the rally to resume until the swing high at $7,450 or the channel top around $7,500 or higher.
Bulls were strong enough to push Bitcoin past the $7,000 mark so they might have enough energy to defend it from here. Many are reviving their bullish forecasts for the cryptocurrency until the end of the year, especially if the SEC approves the Bitcoin ETF applications.
Keep in mind that their ruling on a number of these proposals are due towards the end of this month, so any indication that a positive result is due could lead to early rallies. Rejection, however, could lead to yet another major dip in price.
Meanwhile, risk appetite has been supported in the global financial markets thanks to progress in trade talks, even in Brexit negotiations. A continuation of this mood could also keep propping Bitcoin higher.
Images courtesy of TradingView.