Bitcoin

Bitcoin’s $800 Price Recovery Runs Into Key Resistance

Omkar Godbole
Oct 1, 2019 at 11:00 UTC
Updated Oct 1, 2019 at 11:04 UTC
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  • Bitcoin’s bounce from Monday’s three-month low of $7,715 is struggling to beat the 200-day moving average resistance, currently at $8,440.
  • The recovery rally lacks volume support and could be short lived. A rising wedge breakdown seen on the hourly chart favors a drop to levels below $8,000.
  • A close above Monday’s high of $8,368 is needed to weaken bearish pressures. A bullish close, if confirmed, could yield a break above $9,000.

Bitcoin is better bid on the first day of the fourth quarter, but the relief rally is struggling to gather traction above a key former support-turned-resistance.

The top cryptocurrency is currently changing hands at $8,330 on Bitstamp, representing a 7 percent gain on a 24-hour basis.

Prices hit a high of $8,519 earlier today. At that level, the cryptocurrency was up $804 or 10.4 percent from the 3.5-month low of $7,715 reached in the Asian trading hours on Monday.

A recovery rally was expected, as the cryptocurrency was looking oversold on Monday, having dropped by more than $2,000 last week.

So far, however, a sustained break above the 200-day moving average (MA) resistance at $8,440 has remained elusive.

The 200-day MA is widely considered a barometer of the long-term trend. The cryptocurrency is said to be in a bull market if it is charting higher lows above the key MA, while lower lows below the long-term average is taken as a sign of bear market.

Further, the average line proved a tough nut to crack on Saturday, after which a fresh wave of selling ended up pushing prices to lows near $7,700.

Put simply, the 200-day MA is a crucial resistance, which if breached, may invite buying pressure.

Moreover, a convincing break above the 200-day MA would strengthen the narrative put forward by the likes of popular twitter analyst Crypto Bitlord that BTC may have bottomed out near $7,700.

While Crypto Bitlord is calling a bullish move to $9,000, market analyst Josh Rager is expecting consolidation.

The outlook would turn bullish above $8,800, according to Rager. That said, a convincing break above $8,800 may not happen immediately, as technical studies are still biased bearish and the rally seen in the last 24 hours is lacking substance.

4-hour and hourly charts

Bitcoin witnessed a double bottom breakout on the 4-hour chart in the Asian trading hours, opening doors for a rise to $8,900 (target as per the measured move method).

The breakout, however, lacked volume support. In fact, trading volumes have remained low throughout the price rise from $7,715 to $8,519. A low-volume recovery is often short-lived.

The hourly chart is reporting a rising wedge breakdown – a bearish reversal pattern that indicates the corrective rally has ended and prices could fall back below $8,000 in the next 24 hours.

The case for a rise to $8,900 would strengthen if a move above $8,500 is accompanied by a surge in buying volumes.

Daily chart

Bitcoin is currently struggling to beat the 200-day MA resistance.

The cryptocurrency created a bullish outside bar candle yesterday, signaling seller exhaustion.

A short-term bullish reversal would be confirmed if prices print a UTC close above $8,368 today, validating Monday’s outside bar candle. That could yield a sustained move to $9,000.

However, the outlook as per the longer duration technical charts will remain bearish as long as prices are held below $9,097, as discussed yesterday.

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

Bitcoin image via CoinDesk Archives; 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.