Bitcoin is making a slow and steady recovery toward $7,000. Has bearish market sentiment alleviated? Or, are the current gains simply the result of a market-wide oversold bounce?
On Thursday, BTC broke through the $6,450 resistance and proceeded to reach a weekly high just shy of $6,600. This was prior to a brief pullback to $6,400. The weekly chart shows Bitcoin (BTC) [coin_price] about to set a higher low. After last week’s break from this pattern, a few more weeks of higher lows will be required to determine if a trend change is in order.
4-Hour Chart
Since pulling back from the weekly high ($6,597), BTC has been continuously rejected near the 200-MA ($6,612). Up until this morning, a pattern of lower highs continued as the RSI and Stoch began to descend from overbought territory.
These frequent rejections at $6,530 are a result of a lack of bull volume on each attempt and if BTC were to fall below $6,414 (20-MA) and $6,358 (50-MA and most recent low) then a revisit to $6,270 could occur.
BTC needs to overcome yesterday’s high and proceed to take out the 200-MA, which is also aligned with the 38.2% Fib retracement level at $6,623.
A more convincing move would be for BTC to gain to the midway point ($6,780) of last week’s drop from $7,400 as this would place BTC above the 100-MA and the 38.2% Fib retracement level.
Daily Chart
BTC did manage to close above the 10-day MA and while the overhead moving averages are still angled downward they have begun to flatten. The RSI is climbing mid-channel through a neutral zone and the Stoch is lifting from near oversold territory.
Yesterday’s doji candle shows a degree of indecision. Fortunately BTC went on to post a higher low not shown on chart.
1-Hour Chart
The 1-hour chart shows BTC repeatedly pulling back from $6,570 and $6,550. Each pullback has dropped BTC price from the upper arm to the mid-channel. Then similarly below the 10-MA of the Bollinger band (set at 10, 1, 9).
The 20 and 50-MA should serve as short-term supports. However, the move into the lower BB arm and the sharply dropping Stoch and RSI mean BTC could pullback slightly as it continues to consolidate throughout the day.
Projections
BTC is well situated for short-term gains but remains biased toward bears given the lack of follow-through from bulls after frequent rejections and positioning of the moving averages on the daily and 4-hour chart.
BTC [coin_price] needs to overcome the 200-MA ($6,612) and there is resistance at $6,710 where the 100-MA is situated.
[Disclaimer: The views expressed in this article are not intended as investment advice. Market data is provided by BITFINEX. The charts for analysis are provided by TradingView.]
Where do you think Bitcoin price will go this weekend? Let us know in the comments below!
Images courtesy of Shutterstock, Tradingview.com
