Bitcoin is still trending lower inside its falling channel on the daily time frame but is bouncing off the support area and could be due for a countertrend rally. Price could go as high as the top of the channel or the Fibonacci retracement levels.
The 61.8% Fib lines up with the channel resistance close to the $8,000 major psychological mark while the 50% level is close to the mid-channel area of interest at $7,200. Price is already testing the 38.2% Fib and holding as a ceiling could send bitcoin back to the swing low at $3,900 or lower.
The 100 SMA is above the 200 SMA for now to signal that the path of least resistance is to the upside or that buyers have the upper hand and could keep the climb going. However, the gap between the moving averages is narrowing to suggest weaker bullish momentum and a potential bearish crossover.
RSI is turning higher after recently hitting the oversold zone, though, so a return in bullish pressure could follow from here. Similarly stochastic is pulling up and could move north, so price could follow suit as buyers return while sellers take a break.
Bitcoin appears to be reacting positively to the market rallies these days as simultaneous central bank efforts to prop up their respective economies have spurred gains in stocks and commodities. With that, investors are putting back funds in riskier and higher-yielding holdings, including cryptocurrencies.
However, the outbreak might be far from over as the repercussions on the global economy are likely to last for months, even with easing efforts and rate cuts in place. With that, bitcoin might still resume the long-term drop at some point, provided that it moves in tandem with market sentiment.
One factor that could allow the correlation to break is the upcoming halving which could see nearly double the value of bitcoin in a few months.
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