Bitcoin price pauses after surge, but more to come?
Bitcoin price has dropped back from its year-to-date high, but it is finding support around $7500, and may start to rise from here.
Bitcoin’s surge since December may not be over yet. The beauty, perhaps, of bitcoin is that, with so little in the way of real news (and most of what is ‘news’ is merely guesswork), technical analysis comes into its own.
Simple technical analysis would suggest that, when the price is below the 200-period simple moving average (SMA) (red line in the charts below), then traders should look to sell rallies. This worked well from April 2018 until December. Now, with the price above the 200-period SMA, and the 50-period (blue line) and 100-period (yellow line) moving higher as well, traders are looking to buy dips.
This worked in April, when the price dropped back to $5000 and then surged to $9000. The drop back from $9000 to $7400 has seen daily stochastics drop to oversold levels. A bullish crossover here would signal the return of upside momentum.
Those looking for longs could use the low around $7380 as an area for a stop loss, targeting $9000 at least, if not higher.
The price has found support around $7500, as can be seen on the hourly chart (denoted by the blue rectangle). Gains over the past week have failed to hold above $8000, while the hourly moving averages are still declining.
A recovery above $8000, backed up by rising moving averages, would signal a short-term recovery, and indicate that the balance of risk-reward favours the longs. A reversal below $7400 opens the way to $6900, further eroding some of the gains made since January.
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