Bitcoin, the cryptocurrency has been slowly making it back into the headlines recently. This came after general interest in the cryptocurrency waned after price settled in a steep decline since January last year.
After Bitcoin fell below 4250 in late November 2018, price has remained subdued below this level. BTC/USD briefly slipped to lows of 3215.20 before inching back higher. After staying below the 4250 level for nearly a year, the recent surge in Bitcoin prices saw the mainstream media covering the cryptocurrency once again.
The push in the BTC prices also sent the price of other cryptocurrencies higher as well. This poses the question as to whether we are seeing a shift in the general trend of the prices of crypto currencies.
The breakout from the 4250 level comes on reports of a large volume of orders behind the price surge. With BTC/USD rising to close above the 5000 mark, crypto traders will be asking the question whether this move can be sustained.
BTC/USD pierces 200 day SMA
The crypto currency’s recent surge has sent BTC/USD price to test the 200-day SMA. Price action has managed to close above this level and opened a whole new trading session above the key psychological level at the time of writing.
The next main upside target for Bitcoin comes in at the 6250 level which previously served as support.
Looking at the technical set up, we see that following the breakout from the consolidation below 4250, price is yet to pullback. But there is evidence that BTC/USD could pullback looking at the hidden bearish divergence on the Stochastics oscillator.
Prices remain overbought currently, but this could change in the near term. Ideally, a pullback to or close to the 4250 handle, will entice new buyers into the markets. Given that the surge above 4250 came a surprise, a lot of bids are likely to settle around this key level which could be tested as support.
The overall trend in the BTC/USD remains bearish. But in the near term, this could change, if price manages to rebound off the 4250 level.
To the upside, BTC/USD will be targeting the price level of 6250, which is very evident. A retest of this level could indicate a potential shift in the overall bias of the trend. However, it is a bit too early to speculate at this point.
For the moment, it is ideal that traders focus on the pullback to around the 4250 handle, targeting the 6250 level. This will potentially pave the way for price action to eventually shift from the bearish to the bullish bias.
BTC/USD at resistance. Will it reverse?
Price action is seen currently trading in the previously held support/resistance area. The region between 5114 – 4936 will be a key level in the short term. If this region is breached to the upside, then we expect a continuation further.
Alternately, if we see a reversal based on the divergence, then there is a high likelihood for BTC/USD to potentially pullback and form a higher low. This would fall in line for a potential shift in the trend.
Given the current set up, it is ideal to slowly build positions on the pullback which could be beneficial if price manages to continue above the 6250 level that we see initially. This would be in line with a trend based entry ahead of the major trend being formed.
If BTC/USD fails to rebound near the 4250 level, this could potentially post a risk to the downside. However, it would depend on how price behaves as it nears this level. It is quite possible that there could be a shake-up that could make weak long positions to give up ahead of a rebound.