Bitcoin Seeking Gains After Retaking Key Price Support

Omkar Godbole
Mar 5, 2019 at 11:10 UTC
Updated Mar 5, 2019 at 15:00 UTC
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  • Bitcoin’s immediate outlook will remain neutral while prices are trapped in the range of $3,658-$3,900.
  • If the bulls can keep prices above the 5-week MA support at $3,703, we could see a rally above $4,000. The average is reporting bullish conditions for the first time since August.
  • On the downside, a UTC close below $3,658 (Feb. 27 low) would revive the bearish view put forward by the high-volume sell-off on Feb. 24 and open the doors for a drop to levels below $3,400.

Bitcoin (BTC) has returned above crucial support at $3,700 and could bounce higher if it can defend that level going forward.

The crypto market leader fell 2.4 percent yesterday to $3,670, raising the odds of the bears coming out victorious from the ongoing tug-of-war with the bulls in the range of $3,658-$3,900. Prices, however, are still trapped in that trading range, so the immediate outlook is neutral.

Notably, sellers have been struggling to secure a convincing break below the widely-followed 5-week moving average (MA) located at $3,703. The MA is now trending north and is holding above the 10-week MA for the first time since August 2018, indicating the path of least resistance is to the higher side.

A repeated defense of that level could invite a wave of buying and a re-test of recent highs near $4,200. As of writing, BTC is changing hands at $3,720 on Bitstamp

Weekly chart

As seen above, the 5- and 10-week MAs have produced a bullish crossover for the first time in six months.

Further, the moving average convergence divergence (MACD) histogram is printing a strongest bullish signal in over a year, while the money flow index has breached the upper edge of its current channel, validating a bullish divergence confirmed in December.

A strong bounce from the 5-week MA could yield re-test of $4,190 (last week’s high). A weekly close (Sunday, UTC) above that level would confirm a bullish reversal and open the doors to the psychological hurdle of $5,000.

Daily chart

On the daily chart, the 5- and 10-candle MAs are trending south, indicating a bearish setup. Prices, however, are still holding above $3,658 (low of the long-tailed candle created on Feb. 27).

A UTC close below that level could put the focus back on the big bearish outside reversal candle charted on Feb. 24 and trigger a sell-off to levels below $3,400. The sell-off, however, could be short-lived, unless it is backed by a surge in trading volumes.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; charts by Trading View

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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.