Will Bitcoin’s Defense of Major Support Spark Price Bounce to USD9,600?
Bitcoin has repeatedly defended the 200-day moving average support in the last week. This defence indicates a likely end of the pull-back from $10,350 and a bounce to $9,601 (USD).
Bitcoin started the week negatively by shedding 3.56 per cent and forming a candle with a long upper shadow on Monday. This candle was an indication of buyer exhaustion as well as an opening for a more significant drop to the former resistance-turned-support level of $8,820.
But so far, the downward movement has stopped around the 200-day moving average - widely used to measure a long-term market trend.
The crypto coin, which is the leading cryptocurrency by market value, dropped to $8,985 on Thursday, which is below the 200-day moving average. Luckily, it soon recovered. A similar drop below the critical average occurred on Tuesday, but it was a shallow and short-lived one.
Similarly, Bitcoin almost tested the moving average at $9,046. This "test" happened during the Asian trading hours before the price short back to highs close to $9,200.
The continued defence of the significant support is an indication of the end of the low-volume pull back from the $10,350 high that Bitcoin reached the Friday before.
Currently, BTC is trading at USD9,120 on Bitstamp, which is a 0.40 per cent gain every 24 hours.
On Thursday, Bitcoin formed a Doji candle, which happens when there is two way business in the market and a UTC. A Doji candlestick signals indecision in the marketplace.
However, the latest pattern which has happened after a $1,000 pull from $10,350 shows that sellers are either undecided or exhausted near the 200-day moving average support.
Consequently, there may be a bounce to the 100-day moving average at $9,601 in the next 24-hours.
When prices pulled back from $10,350 to $9,000, trading volumes dropped. Such low-volume pull-backs often reverse; so the price might rally back to $10,350.
In the last six days, Bitcoin has failed to close above the 100-day moving average three times. As a result, should the bulls manage a UTC close above this average, they will invite stronger buying pressure and a move above $10,350.
In the three days to October 27, Bitcoin jumped 28 per cent. This jump reinforced the bullish view that was put forward by the 100-candle moving average’s move above the 200-candle moving average confirmed in mid-October.
What's more, the highest trading volume (all-time high) since February 2018 backs this sharp rise.
According to the hourly chart, if the horizontal support line at $8,977 is breached with substantial volumes, then the case for a rally to $9,600 in the next 24 hours would weaken.
This movement would expose the support lined up at the October high of $8,820, and a violation of this level would be disastrous as the next significant level of support is lined up at close to $8,400.
About the author:
Jay Jackson is a blockchain enthusiast and a freelance writer at topcryptowriter.com. He works closely with brands (people, businesses and startups) in the crypto sphere. He currently writes Blog posts, Guides, Press releases, ICO reviews, eBooks & Whitepapers. You can find him on LinkedIn.
The above references an opinion and is for informational purposes only. Do not take this as personalised financial advice or investment advice. The views expressed by the author do not necessarily represent the opinion of BitPrime.
Last updated: 05/11/2019