Bitcoin (BTC/USD) broke out of its recent doldrums by rallying sharply from just under $7000 to tag $8000 during the 4/12 session. Then it retreated from this resistance, but it looks like the cryptocurrency could have bottomed. Let's take a look at the charts.
BTC/USD Daily Chart
- Usually, in a sharp correction like the one we are having in 2018, there is a major sell-off or capitulation before the market really bottoms.
- The first time price came down to $6000 in February, the volume was relatively low.
- During this recent dip, when price came back towards $6450, we had stronger volume.
- This is more indicative of capitulation - this looks more like a bottom than back in February.
- To kill the bearish outlook, we will still need to see price clear the $8000 level as well as the falling trendline seen in the daily chart.
- Then there is key resistance around $10,000, where the 200-day simple moving average (SMA) resides. This can still keep BTC/USD bearish, or at least in a consolidation under $10,000.
- Above $10,000 BTC/USD starts to shed away the bearish mode.
- The 2 things we are looking for to boost the bullish scenario
1) Price clears $8000.
2) Price holds above $7200 if there is a pullback.
- A break below $7000 on the other hand should remind us that the overall trend is still bearish. A break below $7000 would put the focus back on $6600 and $6450 April support area. If price makes it back to these levels after this push to $8000, we should not rely on them as support.