Bitcoin looks ready to resume its climb as the price bounced off a rising trend line connecting the lows on the 4-hour time frame. Applying the Fibonacci extension tool on this move shows the next potential upside targets.
Price is closing in on the 38.2% extension at $8,761 and could still make it to the 50% extension at $8,943. Stronger bullish pressure could take it up to the 61.8% level that lines up with the swing high at $9,125 or the 78.6% level at $9,384. The full extension is at $9,715.
The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that the climb is more likely to gain traction than to reverse. Bitcoin dipped below the 100 SMA dynamic inflection point briefly but is climbing back above it to show that bulls are still in the game. However, the gap between the indicators is narrowing to reflect slowing bullish momentum.
RSI is pointing up to show that buyers have the upper hand, but the oscillator is already dipping into the overbought region to signal exhaustion. Turning lower could draw sellers back in and spur another test of support. Stochastic is also moving up to suggest that bullish momentum is in play, but the oscillator is also reflecting overbought conditions.
Bitcoin previously returned its gains as risk appetite was improving in the financial markets, particularly after the conflict between the US and Iran boiled over. However, risk off flows are returning mostly due to the spread of the coronavirus and the potential risks on the global economy. This is drawing traders away from traditional assets like stocks and commodities, leading them to pursue higher returns in cryptocurrency markets instead.
Keep in mind also that the halving of mining rewards is approaching in a few months and may be one of the fundamental reasons keeping bitcoin supported as well.
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