A long-term bitcoin price resistance has actually flipped to become support for what appears to be a possible bullish action.
The 50-weekly moving average (50-SMA), which determines the average of bitcoin costs over a 50-week period, wants to presume the function of a strong pullback level. The year’s very first week marked the very first time price closed above the technical indicator since late-April, as displayed in the chart below.
A crossover above the 50-SMA earlier in April pushed the bitcoin price up by 173 percent to $13,868.44 on Coinbase exchange. On the other hand, the resistance-to-support flip of the blacked support wave accompanied the development in weekly trade volume, confirming the cryptocurrency’s breakout action.
The most recent advantage push in the bitcoin cost served a similar to the exact same benefit move. The volumes even more increased to confirm a breakout belief, confirming that traders were aiming to behold the 200-SMA wave as their medium-term assistance.
Strong Fundamentals in Both Cases
The S/R flips noted across the 2019’s and current rate actions obtained beliefs from worldwide disputes.
Last year, bitcoin swelled versus the escalation in the trade war between the US and China, enhanced by the weakening of the Chinese Yuan and the launch of Facebook’s crypto-inspired payment task Libra.
This year, on the other hand, bitcoin rose as the United States raised disputes in the Middle East after eliminating a leading Iranian military leader on January 3. Moreover, worries of a weak business revenues report combined with the Federal Reserve’s balance sheet growth kept investors’ hunger for risk-off assets alive.
The events, basically, benefited bitcoin, a pseudo-safe-haven property.
The Bitcoin Price Bull Trap Theory
Experienced experts may rubbish the function of 50-SMA in identifying bitcoin’s medium-term predisposition based upon the current price actions. Throughout December, the cryptocurrency briefly closed above the wave resistance only to pullback dramatically at later phases.
So it appears, bitcoin might have stretched itself a little too far above the 50-SMA in the most recent case. The cryptocurrency is currently revealing indications of buyers’ fatigue, causing a small drawback correction. It is now down by 5 percent from its local top of $9,194.
The bitcoin price everyday chart describes the interim drawback belief much better. In it, the rate is struggling to close above its ‘blued’ 200-daily moving average, another bias-defining sign for the near-term trades.
The cost could invalidate the bull trap ought to it closes above the 200-daily MA with substantial development in trade volume. More so, the weekly timeframe indicates that bitcoin might retest its all-time high of circa $20,000 on the next advantage run.