Bitcoin has rallied today and it could close the current week in the green after three weeks of decline. BTC/USD is trading at 6356 at this moment according to the weekly chart, it has managed to come back above the 6000 psychological level.
It is still premature to talk about a larger upside movement because the price remains under some bearish pressure, we need a confirmation that the price will start another leg higher. In this article, we’ll talk about a major dynamic support and about his role in a long trading setup.
You can see on the weekly chart that the price has increased since December 2018 within the ascending pitchfork’s body, but, unfortunately, it wasn’t able to close above the 61.8% retracement level and above the median line (ML) of the ascending pitchfork.
The false breakout with a great separation above the 50% Fibonacci line and the failure to retest the median line (ML) has signaled a potential drop. Bitcoin has decreased aggressively in the previous weeks after the failure to stabilize above the 50% Fibonacci line and above the 38.2% retracement level.
Bitcoin has decreased by approximately 50.45% in the previous week, but the buyers have pushed higher and the price has closed the week right above the lower median line (LML) of the descending pitchfork.
The lower median line (LML) represents a strong and critical dynamic support, BTC/USD could give birth to another upside movement if the price stays above the LML. BTC/USD has registered only a false breakdown below the lower median line (LML), a long opportunity could appear if the price tests and retests this downside obstacle, or if we’ll have a reversal pattern near this dynamic support.
Another false breakdown with a great separation or any other reversal pattern will signal an important bullish movement in the upcoming period. The first upside target could be represented by the 50% Fibonacci line of the ascending pitchfork. The major upside target is seen at the median line (ML), BTC/USD could try to approach and reach this dynamic resistance if it will stay within the ascending pitchfork’s body, above the LML.
Personally, I would like to see a consolidation right above the 6000 psychological level, the price needs to confirm a potential upside movement by testing and retesting (rejections, false breakdowns) the LML, so if this scenario will take shape, BTC/USD could increase way above 10.000 level, towards the median line (ML).
A potential upside movement, rebound, will be invalidated by a valid breakdown below the lower median line (LML). So, if Bitcoin will register a valid breakdown below the LML, most likely it will drop way below the 3215 static support.