Bitcoin may be on the road to recovery as it is working its way above the $7500 support zone. If it continues like this, it will test a new resistance at $7,870 within 24 hours according to the technical indicators.
Bitcoin was on a corrective rally yesterday after it created a bullish outside day candle on Tuesday. Unfortunately, the bulls had difficulty absorbing the supply near the 50-candle moving average at $7,550.
Bitcoin has repeatedly failed to beat the moving hurdle and has ended in a downside break of its diamond pattern. There was a sell-off but it ran out of steam at $7,270.
At the time this piece was written, BTC was trading around $7,535 indicating a 0.6% rise in price within 24 hours. From the look of things, it is going to form resistance at $7,870.
There has been recovery from the $7,270 low up to $7,570 and this established a bullish pattern in addition to Tuesday’s outside day candle. BTC may test supply around $7,870.
The bullish wave in Bitcoin’s price is also an indication that it will soon move above the significant 50 week moving average which is currently at $7,711. The only signal of a bearish invalidation would be a weekly close above this level.
Irrespective of the bullish setup, traders should be cautious and look out for the significant moving averages which are 50,100, and, 200. There are biased bears on the 4-hour chart.
If the trend continues like this, Bitcoin is going to rise to the $7,870 level within the next 24 hours. If there is a high volume break above this level, the price will retest the 50 day moving average which is currently at $8,522.
The two moving averages are maintaining a bearish bias. If the bulls fail, the price might drop to $6,900. The Bulls need to capitalize to make progress in the market. Traders are not advised to make any long term trading decisions now.