3 Hurdles Could Complicate Bitcoin’s Price Recovery

Omkar Godbole
Oct 17, 2018 at 11:00 UTC
Updated Oct 18, 2018 at 04:07 UTC
markets

Forcing a bitcoin (BTC) price breakout is looking anything but easy for the bulls, with the path to $7,400 being littered with resistance levels.

Stepping back, the leading cryptocurrency jumped above $6,800 on Monday, neutralizing the bearish view put forward by a downside break of a trendline support last Friday.

The sharp recovery from lows below $6,200 also adds credence to the argument that BTC has likely charted a long-term bottom around the 21-day exponential moving average (EMA). Moreover, the repeated defense of the area around $6,000 indicates sellers exhaustion. Hence, the stage looks set for a strong move to the upside.

However, securing a bearish-to-bullish trend change above $7,402 (Sept. 4 high) is going to be a tough task as BTC could encounter stiff resistance at following technical levels:

Trendline falling from July highs

BTC clocked a high of $6,810 on Monday, but closed (as per UTC) at $6,440, keeping intact the resistance of the trendline drawn between the July 25 and Sept. 5 highs.

At press time, the cryptocurrency is trading around the trendline resistance of $6,430 on Coinbase. A high-volume close above that level would open the doors to the next resistance level lined up above $6,800.

Horizontal line from Sept. 22 high of $6,823

BTC’s failure to hold above $6,823 on Monday has established that level as a key near-term resistance. In any case, it is a key horizontal hurdle, as seen in the chart above.

It is worth noting that horizontal resistance or support levels (major high or low) carry more importance in technical analysis than trendlines, whose connecting points may differ from person to person.

Trendline from March highs

The trendline connecting March highs and July highs is currently located at $7,020 and could cap upside.

The longer the duration of the trendline, the more validity is attached to the support or resistance level it represents.

Hence, the prospects of a bull breakout above $7,400 would rise sharply if BTC manages to clear this eight-month-long falling trendline on the back of strong volumes.

View

  • BTC seems to have carved out a bottom around the 21-day EMA, although a bullish breakout is $1,000 away.
  • A break above the trendline sloping downwards from March highs could be considered an early sign of impending bullish reversal above $7,402 (Sept. 4 high).
  • On the downside, the 21-month EMA of $6,123 is the level to beat for the bears.

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.