Bitcoin broke to the upside of its short-term descending channel to signal that a reversal is underway. However, resistance at $4,450 appears to be holding for now, so a pullback to nearby support zones could take place first.
Using the Fib retracement tool on the latest swing low and high shows that the 61.8% level lines up with the broken channel resistance and 100 SMA dynamic inflection point. The 50-61.8% levels are around an area of interest or former neckline resistance of a double bottom. This chart pattern spans around $500 in height so the resulting climb could be of at least the same size.
The 100 SMA is still below the longer-term 200 SMA, though, so the path of least resistance might be to the downside. This basically means that the selloff is more likely to resume than to reverse. However, it’s also worth noting that the gap between the moving averages has narrowed to signal weaker bearish momentum and maybe even a bullish crossover later on.
RSI still has some room to head south so the correction could go on while sellers have the upper hand. Stochastic is also moving lower but is nearing the oversold region to signal bearish exhaustion. Turning back up could lead Bitcoin price to follow suit.
Bitcoin is grappling with mixed factors pulling price in either direction but it seems that the improvement in sentiment or at least the short-term technical break was enough to draw some buyers back in. Reports confirmed that institutions are still looking to proceed with investments in the space while Nasdaq would likely push through with its bitcoin futures offering.
This appeared to outweigh remarks from SEC Chairman Clayton on how the lack of consumer protection measures in the industry could mean a long time before they approve bitcoin ETF applications.
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