Bitcoin retreated after its earlier strong rally as the price fell back to the bottom of the ascending channel on its 1-hour time frame. If support holds, the price could recover to the resistance levels marked by the Fibonacci extension tool.
The 100 SMA is still above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, the uptrend is more likely to gain traction than to reverse. The gap between the moving averages is still sufficiently wide to signal that bullish momentum is strong.
The price could recover to the 38.2% extension around $12,400 or the 50% extension around $12,600. The mid-channel area of interest lines up with the 61.8% extension around $12,857.41. Sustained bullish momentum could take price up to the 78.6% extension that lines up with the swing high. The full extension is closer to the top of the channel near $13,650.
RSI is starting to turn higher after recently reaching the oversold region to signal that sellers are taking a break while allowing buyers to take over. Similarly stochastic was able to pull out of the oversold region to indicate that bullish pressure might be returning.
BTC/USD Chart – TradingView
Profit-taking seems to have been swift for bitcoin as it rallied to a key resistance area, indicating that investors are being cautious about recent moves. After all, there seems to be no new catalyst that could sustain a climb to fresh highs for the year so far.
Still, keep in mind that longer-term fundamentals are supportive of more gains, leading some analysts to predict that bitcoin could still test its record highs within the year. For one, the mainstream interest and potential adoption of Facebook’s Libra could keep the spotlight on cryptocurrencies that have been in existence for a long time. Apart from that, institutional investment could still be a strong bullish boost.
Images courtesy of TradingView
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