Bitcoin Tests a Critical Resistance Following Overnight Rebound; What’s Next?
- Bitcoin has seen some massive momentum throughout the morning that has allowed it to erase a good portion of the losses that came about due to yesterday’s plunge
- This selloff marked capitulation amongst investors, with many clearly fearing that the multi-month uptrend that led BTC to highs of $42,000 was over and that a deep retrace was imminent
- Nonetheless, bulls have since gained full control over the crypto’s price action, and it is now positioned to see significantly further near-term upside
- One analyst is pointing to the recently broken below 200-day moving average as a key resistance that bulls are now trying to surmount
- A firm break above this level could confirm that this bounce marks a full reversal of the recent downtrend
Bitcoin’s volatility as of late has led the market to see some immense turbulence over the past week, which has primarily favored bears.
However, BTC is now reversing its recent losses and may be on the cusp of continuing its parabolic uptrend, which could mean that this latest dip was simply a final shakeout for over-leveraged investors.
One trader is now closely watching Bitcoin’s reaction to its 200-day moving average.
He notes that this level has become resistance and that a flip above it would be technically significant.
Bitcoin Rebounds Following Yesterday’s Selloff
Bitcoin and the entire crypto market saw a few sharp selloffs over the past couple of days, which reached a boiling point yesterday evening when investor capitulation sparked a massive decline that sent it to $28,000.
It has since erased these losses and is in the process of reversing this downtrend. At the time of writing, the crypto is trading up 6% at its current price of $32,600.
So long as bulls maintain this momentum, there’s a strong possibility that the market will continue climbing higher in the days ahead.
BTC Must Flip 200-day Moving Average Back to Support
The 200-day moving average has long been a key level for Bitcoin, often playing the role of support and resistance.
Overnight, this level was broken below for the first time in months, and bulls are now trying to flip it back into support, as one analyst explained:
“The cloud has been supporting the price since 10,000$ and it is being tested as resistance for the first time now. This is where bulls want to see a bounce, the 200ema is not a pretty resistance to have.”
Image Courtesy of Teddy. Source: BTCUSD on TradingView.
Unless Bitcoin faces a torrent of selling pressure that reverses this rebound, there’s a strong possibility that bulls will continue regaining control of the cryptocurrency’s price action.
Featured image from Unsplash. Charts from TradingView.