Bitcoin Seeking Gains After Retaking Key Price Support
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- Bitcoin’s immediate outlook will remain neutral while prices are trapped in the range of $3,658-$3,900.
- If the 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.
- On the downside, 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 going forward.
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.
Notably, sellers have been struggling to secure a convincing break below the widely-followed 5-week moving average (MA) located at $3,703. The 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.
A repeated defense of that level could invite a wave of buying and a 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.
Further, the moving average convergence divergence (MACD) histogram is printing a strongest bullish signal in over a year, while the money flow index has breached the upper edge of its current channel, validating a bullish divergence confirmed in December.
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 that level could 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
