Support Forming? Why $7.9K Is Bitcoin's New Price to Watch


Bitcoin remains in a bullish territory for now and is looking at further gains, though a pullback is possible if support at $7,900 is breached, according to technical studies.

The cryptocurrency’s first attempt to scale the long-term descending trendline (drawn from the Dec. 17 high and Jan. 6 high) failed on Monday and prices fell below $8,000 as expected at 12:00 UTC.

It’s worth noting that the Bollinger bands (seen on the chart below) show the volatility dropped after BTC dipped below the psychological mark, likely signaling indecision among the bears. As a result, it is not surprising the dip below $8,000 was short-lived.

As of writing, BTC is changing hands at $8,145 on Bitfinex, largely unchanged on a 24-hour basis, but could soon report further gains as the hourly Bollinger bands indicate scope for a retest of $8,400-$8,500.

Hourly chart

The Bollinger bands (+2 and -2 standard deviations from the 20-hour moving average) narrowed after the dip below $8,000, indicating the low volatility period – popularly known as a Bollinger band squeeze.

The 19-hour squeeze ended with a bullish breakout. Additionally, the hourly relative strength index (RSI) is above 50.00 and trending north, also indicating a bullish setup. So, BTC could have another attempt at breaching at the trendline resistance seen today at $8,420.

However, a failure to capitalize on the bullish Bollinger breakout could yield a drop below $7,900 (previous day’s low). In such a case, BTC will likely test 4-hour 200 MA lined up at $7,690.

That said, the outlook as per the daily chart still remains bullish.

Daily chart

Only a daily close below $7,510 (double-bottom neckline/former resistance turned support) would abort the bullish view.

Meanwhile, a dip to $7,690 will likely find bids as the short-term momentum studies are biased bullish. The 5-day MA and the 10-day MA continue to slope upwards (bullish).

View

  • Bitcoin could revisit the descending trendline resistance seen today at $8,420. A daily close (as per UTC) above that level would confirm a long-term bearish-to-bullish trend change.
  • On the downside, a move below $7,900 could yield a fruther drop to $7,690.
  • A daily close below $7,510 would signal the rally from the April 1 low of $6,425 has ended.

Bitcoin on rail via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Let’s block ads! (Why?)


Source link

Previous Can NFC Technology Make Bitcoin’s Lightning Network More Appealing?
Next Bitcoin gets boost from IMF head

No Comment

Leave a reply

Your email address will not be published. Required fields are marked *