Bitcoin recently broke below a short-term rising trend line to signal that a reversal might be underway. Price has found support at the $3,600 area, though, and a pullback is taking place.
The 100 SMA is still below the longer-term 200 SMA on this 1-hour time frame, indicating that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. Then again, price has pulled above the 100 SMA dynamic inflection point to indicate the return in bullish pressure.
The 200 SMA coincides with the 50% Fibonacci retracement level to add to its strength as resistance. If it holds, price could resume the drop to the swing low or lower. A larger correction could last until the 61.8% Fib near the broken trend line and $4,000 major psychological level.
RSI is already indicating overbought conditions or exhaustion among buyers. The oscillator is starting to turn south to signal a return in selling pressure that might stay on for a bit longer or until oversold conditions are met. Stochastic has a bit of room to climb before hitting the overbought territory but is also showing signs of topping out.
A break past the Fibs and broken trend line could signal that buyers are pressing on and could make another attempt to break past the key $4,200 barrier.
Reports that Russia might be looking to use bitcoin to replace US dollar reserves in reaction to sanctions imposed drove the cryptocurrency value slightly higher. After all, this could mean a large market for bitcoin if it happens.
Vladislav Ginko, an economist at the state-funded Russian Presidential Academy of National Economy and Public Administration, said:
“I believe that [the time] is coming when other countries will start doing that and Russia has a brilliant chance to invest into heavily oversold Bitcoin.”
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