Bitcoin is still gaining traction on its bounce and breakout from a short-term falling wedge pattern. This could put it on track for a major pullback on its longer-term slide, possibly even starting a reversal.
Applying the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level lines up with a former support around $6,000 to $6,100. This is also in line with the 200 SMA dynamic inflection point, which might be the line in the sand for a pullback. The 100 SMA is close to the 38.2% Fib at the $5,000 major psychological mark.
The 100 SMA is below the longer-term 200 SMA to confirm that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. This also suggests that any of the Fib levels could keep gains in check, especially since the gap between the moving averages is widening to reflect increased selling pressure.
RSI is heading north to show that buyers are still in control. The oscillator has plenty of room to climb before indicating overbought conditions or exhaustion among bulls. This means that buyers could keep driving price action for the near-term and bring bitcoin at least as high as the nearest Fib.
Stochastic is also pointing up after just pulling out of the oversold region, reflecting a fresh pickup in bullish momentum. This oscillator also has a lot of ground to cover before seeing overbought conditions.
News that the big short position of former IMF economist Mark Dow has been closed led traders to think that he might be seeing a bottom on bitcoin price. This likely spurred a flurry of long positions as a rebound might be in the works from here.
Also, Blockchain Capital partner Spencer Bogart noted in an interview with CNBC Money that it’s now a fantastic time to buy bitcoin. Increased coverage on these bullish forecasts could further stoke gains.
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