Bitcoin is retreating from its recent rally but could be due for a bounce off support soon as it approaches the bottom of its ascending channel on the 4-hour time frame. Price is around the mid-channel area of interest as of this writing, and there may be some buying pressure around this area, too.
This lines up with the 50% Fibonacci retracement level on the recent climb to the channel top, excluding the spike. A bounce could take Bitcoin up to the resistance around the $7,000 major psychological mark. A larger pullback, on the other hand, could test support at the $6,400 level.
The 100 SMA seems to be above the longer-term 200 SMA to signal that the path of least resistance is to the upside or that the uptrend is more likely to resume than to reverse. With that, support could hold at current levels or the bottom of the ascending channel.
Stochastic has already reached oversold levels to signal exhaustion among sellers and a possible return in bullish pressure as well. However, RSI is still heading south and has room to go before hitting oversold levels, which suggests that bearish momentum could stay in play. A break below the channel bottom could signal the start of a downtrend.
Bitcoin could be in for a more steady climb as institutional funds could have better access to the cryptocurrency on the launch of Fidelity’s platform for Bitcoin and Ethereum. Many expect volumes and activity to tick higher in the first half of next year as this is when the platform might be more commercially available.
Still, there is some uncertainty surrounding the pending SEC decision on Bitcoin ETF applications, with some still hoping that an approval could usher in a strong rebound before the end of this year. Rejection or the lack of a decision, however, could keep markets in limbo.
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