Leading RoboForex analyst Dmitry Gurkovsky explains the possible future scenarios for Bitcoin’s price movements.
Bitcoin tested the $24,300 level as part of the ‘Triangle’ pattern on the daily chart. The rise began after testing the fast moving average. Prices have now moved well above that line again. This price action could indicate an attempt at another pullback and a test of the fast moving average ahead of a fresh wave of gains.
The nearest support from which prices rebounded higher is at $21,735, but the fast moving average is still below it. If buyers can hold the price at current levels, the Moving Average will begin to rise and a deeper correction would be avoided.
Daily BTC/USD chart on Bitstamp from TradingView.
Nevertheless, traders are undeterred by the correction, and many continue to actively buy the digital currency at the slightest dip in its price. After the price of the leading cryptocurrency pulled back from its highs, MicroStrategy CEO Michael Saylor, announced another Bitcoin purchase of $650 million.
Moreover, prior to this, Saylor suggested Elon Musk follow his example and convert part of Tesla’s balance into Bitcoin. He argues that this could to spur other companies in the S&P 500 index to follow their example. In response, Tesla’s chief asked whether such large transactions are possible. Saylor replied in the affirmative: he has already purchased Bitcoin totaling $1.3 billion and is ready to discuss the details in person. Of course, such purchases, if implemented, would spur growth.
4-hour BTC/USD chart on Bitstamp from TradingView.
Technical analysis of the 4-hour chart points to a potential formation of the ascending Wolf Wave pattern. To complete the pattern, prices must make a new local low and test the $21,000 level. Only after that can one speak of further upside within the pattern.
A good signal in favor of the price-rise scenario would be a bounce off the lower boundary of the ascending channel. A second signal would be the RSI dropping below 30, which has previously spurred the cryptocurrency to two substantial bounces upward. A drop below $20,000 could lead to an even deeper price correction.
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