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Bitcoin recently pulled back to an area of interest or former resistance at the $6,300 to $6,500 zone, which appears to be holding as support. If the bounce gains more traction, bitcoin could aim for the Fibonacci extension levels next.
The 38.2% Fib is located around $6,600 which is still within the area of interest. The 50% level is closer to the $6,700 major psychological mark and the 61.8% level coincides with the swing high. Stronger bullish momentum could take bitcoin up to the 78.6% extension near $6,900 or the full extension around $7,050.
The 100 SMA is still above the longer-term 200 SMA for now, so the path of least resistance is to the upside. This means that the rally is more likely to gain traction than to reverse. However, the gap between the moving averages has narrowed to signal weakening bullish momentum and a possible bearish crossover, which might bring sellers back in.
Stochastic is also on the move south so price could follow suit while sellers have the upper hand. RSI is also turning lower without reaching overbought levels, indicating that bears are eager to return. In that case, bitcoin could still slump to the swing low around $6,300 or even the longer-term lows around $6,100.
Bitcoin appears to have drawn some support from the SEC comment period on the bitcoin ETF applications and news that Google will be reversing its ban on ICO ads by October. Although the search engine will only accept ads from regulated entities in the US and Japan, this could still bring in a fresh influx of funds, particularly from newer investors.
Recall that Google previously banned these ads to protect consumers from fraud, so the move to lift this ban while keeping with regulation is seen as a step towards legitimizing the industry. Traders are also looking forward to the launch of bitcoin futures on ICE.
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