Bitcoin recently broke above a shallow descending trend line connecting the highs on its 1-hour chart and seems to be finding support at this level. This happens to line up with the 50% Fibonacci retracement level.
The 100 SMA is still below the 200 SMA to indicate that the path of least resistance is to the downside or that support is more likely to break than to hold. In that case, bitcoin could still dip lower to the 61.8% Fib or even fall back below the descending trend line.
Then again, the gap between the moving averages is narrowing to reflect weakening selling pressure and a potential bullish crossover. If so, bitcoin could gain traction on its climb and break above the dynamic resistance at the 200 SMA around $8,900.
RSI is on the move down to indicate that sellers are in control, but the oscillator is starting to turn higher from the center line to suggest that buyers might take over from here.
Bitcoin is regaining some ground as risk aversion extended its stay in the markets on account of coronavirus concerns. The focus is still on the spread of the outbreak outside of mainland China as this could mean more trade and travel restrictions, which would then be bearish for stocks and commodities in the long run.
Meanwhile, the dollar is also under downside pressure due to the Fed’s surprise interest rate cut intended to limit the economic impact of coronavirus. NFP data is due soon and downbeat results could reinforce expectations for more stimulus, which could be more bearish for the US currency.
Keep in mind that bitcoin is awaiting the halving of mining rewards that could potentially double the value of the cryptocurrency over the span of months or years.
Images courtesy of TradingView
