In a week or so since Bitcoin (BTC) had a dramatic reversal and surge away from a growing downtrend, the leading crypto has painted a very bullish picture that suggests these gains may be locked in.
Starting with the weekly chart, we must first notice the EMAs, specifically the 21 EMA (orange). The 21 EMA is a rather critical level historically speaking, having supported the entire Bitcoin bull market from 2016-17, which saw Bitcoin top out at $20k. The 21 was lost in September, and the 55 EMA became the battle line, which the bulls defended doggedly for three weeks.
The 21 was retaken at the end of October, and was held during the fragile week that just closed; price not only closed above the 21, but never fell below it.
We can also see that Bitcoin has been ranging within the support band from the big summer consolidation, holding this retest level after breaking through it during the October surge. Volume was down a lot this week on Coinbase, with a markedly lower sell volume ratio between the last two weeks. Finally, we see that the downtrend resistance of the summer consolidation was broken through during the week.
On a different weekly chart, we see that the so-called ‘EMA fan’ has started to recover after threatening to collapse in September. This is an important development, as a bullish market will be supported by a bullish EMA fan: Sequentially in order from smallest EMA on top to longest on bottom.
Here we can see that the 8-week EMA has been pushed back above the 21 EMA, and looks poised to cross back above the 13 EMA. This would return the EMA fan to a fully bullish configuration.
Finally, if we peek the daily chart, we see that price has been held at the 8-day EMA during the entire retracement after the surge, not closing below this level at all. Again, price is holding perfectly within the summer support area (blue), with bulls and bears pretty evenly matched throughout last week.
The RSI here has held very well at about 55, and has formed a good base to launch up if it wants. The histogram has been cooling off, downtrending with a flat trajectory. This can also be seen as bullish, as the histogram has cooled without arching down; without signaling a deeper retracement.
As the reader can tell, this analyst is pretty bullish on Bitcoin. The signs are all positive, as the surge’s gains have been completely held with only a modest retrace. Furthermore, there is still plenty of room left on the retracement scale available to Bitcoin, if it wants to consolidate a bit more, and still remain bullish. It is hard to find negative signs here; but of course, that doesn’t mean they won’t crop up in the coming week.
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