Bitcoin looks primed for a minor rally, having defended a key moving average support in the last 72 hours, technical charts indicate.
The 50-day moving average (MA), one of the most widely tracked technical indicators, was put to test in the previous two trading days. However, on both occasions, prices failed to penetrate the MA support on a daily closing basis (as per UTC), signaling a bearish exhaustion.
Today is no different. The leading cryptocurrency picked up a bid around the 50-day MA support of $6,938 earlier today and rose back above $7,000, raising prospects of a corrective rally.
At press time, BTC is changing hands at $7,050 on Bitfinex – up 0.70 percent on a 24-hour basis.
The solid defense of the 50-day MA support and the early signs of bullish reversal, as seen in the short-duration chart below, indicate scope for a stronger rally toward $7,400.
The above chart shows, the current 4-hour candle is hovering above the top end (resistance) of the falling channel (bearish pattern).
A bullish breakout would be confirmed if the candle closes above the falling channel hurdle. In this case, BTC will likely rise toward the downward sloping (bearish) 100-candle MA, currently located at $7,438.
This scenario appears more likely as the bullish divergence of the relative strength index (RSI) is signaling the tide has turned in favor of the bulls.
BTC created a bearish outside-day candle yesterday, meaning the day began with optimism and ended with pessimism. Still, BTC managed to defend the 50-day MA today, which indicates the bears have likely run dry.
All-in-all, there is a reason to be optimistic, although the bulls still can’t afford to lower their guard as the short-term MAs are biased toward the bears: 5-day and 10-day MAs are trending south.
The sell-off from the July high of $8,507 would resume, sending BTC below the rising trendline if prices close today (as per UTC) below $6,847 (low printed by previous day’s bearish outside-day candle).
- BTC looks set to take out the falling channel resistance and could rise toward $7,400 in the next 24 hours, courtesy of the bear failure at the 50-day MA support and the bullish RSI divergence.
- BTC risks a deeper drop below $6,700 (rising trendline support) if prices find acceptance below $6,847 (previous day’s low) today.