- Bitcoin's interaction with the 100-period moving average on the daily and weekly charts have provided strong regions of support in the past and may do so again.
- Exhaustion caused by low levels of total daily volume and market activity raises doubts about the direction for the mid-term.
- Should the bulls lose the on-going stalemate in buying and selling pressure, bitcoin risks falling to weekly supports located near $7,560 in the coming weeks.
Bitcoin's (BTC) price action continues to stall as the fight between buyers and sellers falls quiet near a key average line.
The world's largest cryptocurrency by market value is experiencing stagnant market activity for the seventh straight day with the widely-followed 100-period moving average (MA) restricting the downside.
As of writing, BTC is changing hands at $10,140 on Bitstamp, representing little change on the day, having tested the 100-day MA at $10,047 earlier today. Exhaustion continues to play a part seen by low levels of total daily volume between Aug. 22 and Aug. 27, demonstrating minimal liquidity overall.
The last bastion of defense for the bulls in the mid-term rests along the 100-period moving average (MA), as seen in the chart below.
Previously, BTC has reacted bullishly when interacting with the 100-period MA during an upward trending market (marked by a series of higher highs and higher lows), providing a strong region for a price bounce. That may yet prove fruitful should prices move above Aug. 26's close near $10,360.
While BTC remains officially bullish above the 100-period MA (located at $10,047), a firm close below that price level could revitalize bear market aspirations.
Should buyers lose the on-going struggle for dominance in the coming month, then that would expose weekly supports located near a region with historical significance and a confluence of the 100-weekly MA.
The weekly chart demonstrates how the 100-period MA reacts with BTC's price by acting as a region of support during a strong uptrend.
For instance, on Jan. 11, 2016, BTC's price fell by 20 percent, pulling back to the 100-period MA before it took 28 days to recover and break to new highs. As stated, a loss by the bulls could expose the confluence of supports near June 10 lows and the 100-period MA at around $7,560.
Momentum would appear to be waning as the weekly awesome oscillator (AO), a trend-following indicator, begins to tick down toward the neutral line, backing the bearish outlook heading into next month.
However, a daily push and firm UTC close above $10,350 would question the bears to reconsider the short-term play and add credence to the theory of the 100-period MA acting as strong support during a bullish uptrend.
Disclosure: This author holds no cryptocurrency at the time of writing.
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