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Bitcoin recently broke out of its descending channel on the 1-hour time frame to signal that a reversal from the downtrend is in the works. Price appears to be forming a new ascending channel as it bounces off resistance and looks ready for a pullback.
Applying the Fibonacci retracement tool on the latest swing low and high shows that the 50% level lines up with the rising channel support around an area of interest. The 38.2% level is closer to the $4,000 major psychological mark which might be the line in the sand for a pullback. Price is currently testing the 38.2% Fib at the dynamic support of the moving averages.
On the subject of moving averages, the 100 SMA just crossed 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 resume than to reverse. If support areas hold, price could revisit the swing high near $4,500 or the channel top at $4,600.
RSI is on middle ground but appears to be halfway on its move down to the oversold region. This suggests that sellers could stay in play for a bit longer and allow the correction to carry on. Stochastic is already pulling up without even reaching the oversold territory, indicating that buyers are eager to return and push price back up.
Bitcoin has drawn support from revived hopes that institutions could put more funds in the sector despite the recent bear market. This has been supported by the launch of an OTC trading platform for institutions by Coinbase and confirmation that Nasdaq will push through with bitcoin futures early next year.
These were enough to overshadow SEC Chairman Clayton’s remarks on how they likely won’t be approving bitcoin ETF applications anytime soon.
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