bitcoin (BTC) could test a key resistance line for the first time in nearly two months.
The widely followed 50-day simple moving average (SMA) line is currently located at $3,940 – $100 above BTC’s current price of $3,840 – according to Bitstamp data.
The crucial SMA line was last put to test on Nov. 8. Back then, the SMA was located at $6,450 and was serving as a stiff resistance.
On Nov. 14, BTC nosedived below $6,000, putting the bears back into the driver’s seat. As a result, the gap between the 50-day SMA line and price widened sharply in the following two weeks. Notably, on Nov. 25, the 50-day MA line was located at least $2500 above price.
That spread, however, has narrowed sharply in the last two weeks, indicating waning bearish pressures. Further, price chart analysis indicates that the bulls have , at least for the short-term.
BTC, therefore, could test and possibly break above the 50-day SMA line of $3,940 in the next day or two.
Daily chart
As seen above, BTC ran into offers near the 50-day SMA earlier today. Notably, at 00:05 UTC, BTC was trading $40 short of the 50-day SMA.
Despite the pullback from intraday highs near $3,900, the outlook remains bullish, as the positive divergence of the relative strength index (RSI), confirmed on Dec. 18, is still valid.
Further, 5- and 10-day exponential moving averages (EMAs) are beginning to curl upwards. The RSI is also biased bullish above 50.00.
The 50-day SMA is indeed trending south, indicating a bearish setup. The long-term averages, however, are lagging indicators. As a result, the price action always supersedes the long-term moving average lines.
It is worth noting that a break above the 50-day SMA, if confirmed, would open the doors to $4,170 – neckline of the inverse head-and-shoulders pattern. The 50-day exponential moving average (EMA) is also located just below the neckline hurdle. So, $4,170 is the level to beat for the bulls.
6-hour chart
The triangle breakout seen in the 6-hour chart indicates that the rally from the December low of $3,122 has resumed.
The RSI is printing bullish levels above 50.00. Meanwhile, the stacking order of the 50-candle MA above the 100-candle MA is also a classic bull indicator.
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- BTC could rise above the 50-day SMA of $3,940 and extend the rally to $3,170 in the short-term.
- A UTC close above $4,170 (neckline hurdle + 50-day EMA) would confirm an inverse head-and-shoulders bullish reversal and open up upside toward the psychological hurdle of $5,000.
- The bullish case would weaken if prices drop below the support at $3,566 (Dec. 27 low).
Disclosure: The author holds no cryptocurrency assets at the time of writing.
image via Shutterstock; charts by
Published at Thu, 03 Jan 2019 11:00:21 +0000
