After coming within a hair’s breadth of $10,000, BTC reversed course to trade at the $9,500 support. Are traders in for a day or two of range bound trading or is this pause in momentum simply a short consolidation period before Bitcoin blasts off?
Bitcoin and a handful of top altcoins pulled back roughly 3 – 5% over the past 24 hours in what appears to be a temporary break from a month of pleasantly consistent growth. While BTC appears to have overheated, overall market sentiment remains positive as the cryptocurrency market capitalization approaches nearly half a trillion dollars and everyone enthusiastically awaits the crossing of the $10,000 mark.
As BTC trades higher and higher pullbacks are to be expected as the market becomes overbought and some investors sell to preserve profits. Aside from Warren Buffett, Charlie Munger and Dr. Doom’s (Nouriel Roubini) trashing of cryptocurrencies, frequent tidbits of positive BTC news continue to bolster confidence in cryptocurrencies and little has changed to negatively impact BTCs positive technical setup.
The past week provided mostly bullish behavior as Bitcoin broke through multiple resistance levels at $9,200, $9,500 and $9,700 on its ascent towards $10,000.
On May 4th, BTC finally broke out of the tightening triangle, crossing $9,500 and providing a day or two of exciting upward movement to $9,990 but BTC was unable to break above the 200-day MA at $10,051.
Earlier today the cryptocurrency showed signs of being overbought and reversed from $9,990 to $9,456 but at the time of writing, BTC is slowing recovering lost ground. The current pullback has knocked BTC out of the ascending channel as the RSI approached 70 and the 5-day EMA dipped below the 10-day MA.
Bitcoin has yet to cross the 200-Day MA though it has come within a hair’s breadth. At the time of writing, the 5 and 10-day MA are beginning to put some distance between each other while continuing upwards, indicating a healthy short-term trend and possibly even qualifying the current pullback as a purchasing opportunity.
The Stoch on the 4 hour chart show BTC becoming clearly overbought as it neared $10,000 and currently the cryptocurrency is oversold, finding support at $9,450 – $9,600 and the above chart suggests a possible reversal as BTC bounces of support and the Stoch lines appear to be attempting a reversal.
In spite of today’s pullback, Bitcoin remains in the ascending channel with the 20-day MA well above the 50 and sharply angled upward.
Throughout the day BTC has fluctuated between $9,400 -$9,600 and the flattening RSI and descending MACD indicate either further range bound trading or additional decline in the short-term while various iterations of the moving averages and fact that BTC continues to trade in the ascending trend line suggest the positive long-term outlook remains intact.
BTCs is only overbought for the short-term and the long term picture projects continued recovery once BTC trades above the 200-day MA and crosses major resistance points at $10,000, $10,500, $11,250, $11,750 and mid 12s.
For the short-term BTC appears to be flashing buy and aggressive traders and swing traders could set orders from $9,500 – $9,700 and trade the trend while longs are advised to continue hodling.
The current pull back is expected as BTC was forecasted to struggle at the 200-day MA and $10,500. Strong support exists at $9,500 – $9,600 meaning ambitious swing traders could play from $9.5 – 10.5k.
BTC price is bound to rebound within the next 36 hours as long as it remains in the ascending channel. A BTC close under $9,500 threatens to throw BTC out this channel, opening up the possibility of price erosion to the $9,200 support and below.
Upon crossing the 200-day MA BTC will face immediate challenges at $10,500 and $11,250.
Where do you think Bitcoin price will go this week? Let us know in the comments below!
Images courtesy of Shutterstock, Tradingview.com