Bitcoin has bounced off a long-term trend line support and is showing more upside momentum.
Bitcoin Key Points to Look At
- Bitcoin price has bounced off a long-term rising trend line support, signaling it could be ready to resume the climb.
- Price has also formed an inverse head and shoulders reversal pattern and is breaking above the neckline.
- There are some signs of hesitation, though, as technical indicators are hinting at a potential turn.
The 100 SMA is safely above the longer-term 200 SMA on the daily time frame to indicate that the path of least resistance is to the upside. This means that the uptrend is more likely to continue than to reverse. However, price is trading below the 100 SMA dynamic inflection point so this might still hold as near-term resistance.
This also lines up with the $12,000 major psychological level, which has been a former support level. If it holds as resistance from here, bitcoin could resume the drop to nearby support areas at $10,000 then $8,000. Stronger selling pressure could even lead to a break below the trend line and a sharper selloff.
Stochastic is already indicating overbought conditions and looks ready to turn lower, so it might drag bitcoin back down when bearish momentum returns. RSI is on the move up, though, so the rally could still be sustained.
Other Factors To Note
Risk sentiment has been particularly shifty in the past few weeks, and so has bitcoin dynamics. From previous trading on risk appetite, bitcoin appears to be taking advantage of risk-off flows as a safe-haven once more.
This was particularly evident when trade war fears picked up on Trump’s announcement about imposing higher tariffs on imported steel and aluminum. Although the dollar gained ground against higher-yielding currencies and assets then, bitcoin was also able to advance.
This isn’t new, though, as bitcoin price has previously been able to benefit from geopolitical risk. One other source of this these days are resurfacing Brexit issues on the EU draft agreement, which is also hurting European markets.