There has been lots of speculation since the price of Bitcoin slipped below $7,000 a few minutes before press time, in a move many crypto professionals stated demands caution. It is important to note that Bitcoin closed above the trend line slopping downwards from the Highs of March 5 and May 5. This confirms a long term bearish-to-bullish trend change.
Nevertheless, despite this strong indication, the performance of bitcoin has been somewhat disappointing. As at Wednesday, bitcoin was trading at $6,965, down by 3.5 percent on a 24-hour basis. This negative price action draws our attention to the failed long term bullish breakout we experienced in July. And although market sentiments and indicators points to a long term bull reversal, one must trade with caution at the moment.
Looking at the above chart, you can see that that bitcoin moved above the falling trendline on July 24th, trapping the bulls on the negative side of the market.
During what was thought to be a bullish reversal, BTC crossed the long term falling trendline indicating a move to $8,507, unfortunately the move did not materialize as it slid back below the psychological support of $6,000 by mid-August.
The bull market which was expected was short lived and was attributed to overbought conditions which was indicated by a relative strength index (RSI) of 77.00. More so, the BTC market was further rocked by the US Securities and Exchange Commission’s (SEC) decision to reject bitcoin exchange-traded funds (ETFs). This played a huge part to push the price below $6,000.
Today’s chart puts the RSI at 64.50, this shows that the price of bitcoin could rally toward s the immediate resistance at $7,806 (200-day moving average). Again the market seem to have been priced no thanks to the ETF-related bad news in the first half of August.
Also it is important to note that Bitcoin’s recovery from $5,859 (August low) has produced the first higher price low of the year, this shows that the markets is bound for a bullish trend. As such, the current dip in price may just be a pullback of some sort.
Looking at the 4-hour chart, you can clearly see that markets sentiments remains bullish with the rising channel still intact. More interestingly, the increasing order of the 50-candle, above the 100-candle, above the 200-candle moving averages (MAs) points to a typical bullish trend.