Story by: Omkar Godbole
- Bitcoin’s repeated defense of the 200-day average support indicates an end of the pullback from $10,350 and scope for a bounce to the 100-day average at $9,601.
- A UTC close above that level and a further rise to above $10,000 cannot be ruled out, as the recent pullback from $10,350 lacked volume support.
- Acceptance below the hourly chart support of $8,977 would weaken the case for a bounce in the next 24 hours.
Bitcoin looks primed for a price bounce to $9,600, having repeatedly defended long-term support in the last 72 hours.
The top cryptocurrency by market value began the week on a negative note by shedding 3.56 percent on Monday. Notably, BTC formed a candle with a long upper shadow on that day, signaling buyer exhaustion and opening the doors for a deeper drop to the former resistance-turned-support of $8,820.
So far, however, the downside has been restricted around the 200-day moving average (MA), a widely-tracked barometer of the long-term market trend.
The cryptocurrency dipped to $8,985 on Thursday, below the 200-day MA, but soon recovered. On similar lines, Tuesday’s dip below the key average was shallow and short-lived.
Similarly, BTC came close to testing the MA at $9,046 during the Asian trading hours today before jumping back to highs near $9,200.
The repeated defense of the major support indicates the low-volume pullback from the high of $10,350 reached last Friday has likely ended and the risks are skewed to the upside.
As of writing, BTC is changing hands at $9,120 on Bitstamp, representing a 0.40 percent gain on a 24-hour basis.
BTC is defending the 200-day MA for the third straight day.
The cryptocurrency formed a doji candle on Thursday, which occurs when the market witnesses two-way business and a flat end of the day close (UTC). Usually, that candlestick pattern is taken as a sign of indecision in the market place.
The latest pattern, however, has appeared following a $1,000 pullback from $10,350 and represents indecision or exhaustion among sellers near the 200-day MA support.
As a result, a bounce, possibly to the 100-day MA at $9,601, may be in the offing in the next 24 hours or so.
Note that trading volumes dropped as prices pulled back from $10,350 to $9,000. A low-volume pullback is often reversed, so, a rally all the way back to $10,350 could be on the cards.
Bitcoin has also failed three times in the last six days to close above the 100-day MA. Therefore, if the bulls can pull off a UTC close above the average, it will likely invite stronger buying pressure and lead to a move above$10,350.
Bitcoin jumped 28 percent in the three days to, reinforcing the bullish view put forward by the 100-candle MA’s move above the 200-candle MA (bull cross) confirmed in mid-October.
Further, the sharp rise was also backed by the highest trading volume since February 2018. The path of least resistance, therefore, is to the higher side.
The case for a rise to $9,600 in the next 24 hours would weaken if the horizontal support line at $8,977 seen in the above chart is breached with strong volumes.
That would expose support lined up at $8,820 (Oct. 11 high). A violation there would prove costly as the next major support is lined up directly near$8,400.