Bitcoin could be due for a pullback after its recent trend line break, as bulls pause to gather more energy after hitting a key upside barrier. The Fibonacci retracement tool shows where buyers might be waiting.
The 61.8% level lines up with the broken trend line and 100 SMA dynamic support level around the $8,500 mark. This is also in line with a short-term broken resistance that might now hold as support. A shallow pullback could already hit support at the 50% level around $8,850 or bounce off the current levels around the 38.2% Fib.
The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that the climb is more likely to gain traction than to reverse. The gap between the indicators is also widening to reflect stronger bullish momentum.
RSI is pointing down, though, indicating that sellers might still have the upper hand and could keep the correction going for a while. Stochastic is heading south so the price could follow suit while bearish pressure is present, but the oscillator just crossed the center line to confirm that sellers could stay in control. Once both oscillators hit the oversold regions and pull up, buyers might return and push bitcoin back up to the swing high and beyond.
BTC/USD Chart – TradingView
Bitcoin has had a rough ride for the most part of October on the lack of volatility and regulatory jitters popping up from the Congress hearings on Facebook’s Libra. Many worry that the possible oversight on this product could spread to the entire industry and limit developments.
However, news that China’s government is looking into investing more in bitcoin’s blockchain brought some hopes back. In addition, traders appear to be focusing on longer-term catalysts like the halving of mining rewards next year, which could prove bitcoin bullish.
Images courtesy of TradingView
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