The bitcoin-us dollar exchange rate seems to be re-gaining much of its recently lost momentum.
In light of regulatory news from South Korea, bitcoin, along with many other cryptocurrencies, experienced a slight bearish reversal to the downside of its month-long uptrend, and a downward pull toward its 50-day moving average.
At the time of writing, bitcoin’s USD rate is hovering directly above its 50-day moving average at $4,324, as per data from CoinMarketCap.com. The two day sell-off seems to have ran out of steam quite quickly as it neared the $4,157 level. Immediately after, a bullish rebound was experienced near its 50-day moving average around $4,187.
However, this quick rebound seen in the one hour supports the notion that fears regarding the event are overblown. So, with that being said, is bitcoin ready to set new all-time highs, or are we currently sitting in an epic bull trap?
Well, as of right now, bitcoin’s USD rate seems to be suspensefully hovering around a crucial “make it or break it” point.
Lets take a look at the charts.
Technical Analysis
BTC/USD (Daily):
As shown by the chart above, bitcoin has maintained a solid rally since its rebound at the 50-day moving average support level. While an encouraging signal, this may not be enough to confirm bullish action moving forward. In order for this to happen, BTC must re-gain control of its month long uptrend, and break to the upside around $4,375.
Overall, however, buy volume seems to be continuing to flow in strong. The RSI is remaining solidly intact, and its momentum has not been thrown off just yet. Along with this, the 12-day EMA seems to sustaining its upward rise quite well, and is showing no major signs of over-bought volume.
Also, BTC’s current USD rate is still hovering directly above its 50-day moving average, indicating that its current level may be providing a strong floor of support.
BTC/USD (4 Hour):
A golden crossover of the 50-day and 100-day moving averages was confirmed on Tuesday. Todays 3% from $4,150 to over $4,300 adds credence to the notion that moving average crossovers tend to work after a time lag.
The golden crossover is a bullish breakout pattern formed from a crossover involving a short-term moving average (such as the 50-day moving average) breaking above its long-term moving average (such as 100-day moving average) or resistance level.
Bearish Scenario: Possibly head and shoulders?
Currently, Bitcoin is sitting at an imperative “make it or break it” point. While fundamental factors have been the reason for continued optimism within crypto investors and speculators, technicals should never be ignored. And in this case, BTC may be in the beginning stages of forming a head and shoulders bearish reversal.
A head and shoulders formation consists of a left shoulder (formed), a center head (formed), and a right shoulder (pending formation), along with a line drawn to indicate the neckline. A break below this neckline would clearly confirm a bearish reversal.
Overall, there are two scenarios we must keep in mind:
An end of day close above the rising trend line would clear the path to $4,700.
A failure to re-gain control of the upward trend lend followed by a break below the head and shoulders neckline at $4,170 would clear the path for a pullback to the $3,800 level.
Conclusion
While great optimism remains in the cryptocurrency community, technical factors seem to be causing a bit of fogginess regarding bitcoin’s short term future. Will it regain control of its uptrend and make it’s way to new highs, or will it fall victim to another bearish reveral. So far, nothing is truly clear. Only time will tell.
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