Bitcoin appears to be gaining more traction on its bounce off the ascending channel support on its 4-hour time frame. It has broken past a short-term descending trend line and has formed a small double bottom in that area as well.
Price has broken above the neckline of the formation to confirm that an move higher is underway. Bitcoin is closing in on the dynamic inflection points at the moving averages and a break to the upside could add bullish confirmation.
Applying the Fibonacci extension tool shows that the 38.2% extension is just close by and may also provide extra resistance. The mid-channel area of interest that lines up with the 50% level and might also attract selling pressure. Sustained bullish momentum could take bitcoin to the 78.6% extension at the channel top or the full extension around $7,075.
Stochastic is still on the move up to suggest that bullish pressure is present, but the oscillator is nearing overbought levels. Turning lower could indicate a return in selling momentum. RSI is also nearing overbought conditions to suggest that buyers might be feeling tired and ready to let sellers take over. If so, a break below the channel support could signal a downtrend.
Bitcoin is starting November off on positive spirits, not unlike previous instances where sentiment is up at the beginning of the month on trader optimism. A number of analysts are confirming that bitcoin is gaining strength after a long correction this year, with some renewing strong bullish forecasts for the end of the year.
According to First Digital Assets Group’s OneAlpha, this may have been a cleansing effect on the markets:
The December 2017 and January 2018 boom and bust had a cleansing effect on the ecosystem, removing many of the speculators and leaving mainly real investors, operators, and builders in the market. This is what was necessary to move forward and build a successful ecosystem.”
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