Bitcoin recently broke above its long-term descending trend line on the daily time frame to signal that a reversal from its downtrend is due. Price has since completed a retest of the broken trend line and looks ready to resume its climb.
Applying the Fibonacci extension tool shows the next potential upside targets. Bitcoin is already approaching the 38.2% level at $9,259 which is in line with the swing high and might be the first take-profit point. Stronger bullish momentum could take it up to the 50% extension at $9,591 or the 61.8% level at $9,923. The 78.6% extension is at $10,400 and the full extension is close to the $11,000 mark.
The 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to gain traction than to reverse. However, the gap between the indicators is narrowing to signal weaker bearish momentum and a potential bullish crossover. Price has also climbed above the 200 SMA as an indicator of bullish pressure.
RSI is pointing up to show that buyers have the upper hand and could stay in control until overbought conditions are met. Stochastic also turned higher to reflect a return in bullish pressure even before reaching the oversold region. Both oscillators are closing in on the overbought territory, though.
Bitcoin seems to be once again taking advantage of the pickup in risk aversion stemming from the attention on the coronavirus outbreak in China. This is dragging global stocks lower, leading traders to pursue returns in alternative markets such as cryptocurrencies.
Apart from that, central bank decisions lined up over the next couple of weeks are also keeping traders on edge when it comes to fiat currencies. Instead, positive fundamentals like the upcoming halving of mining rewards are rendering bitcoin the more appealing alternative.
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