Bitcoin has managed to claw its way back above $6,000 after dipping to $5,785 late last night; the lowest price levels we’ve seen BTC this year. Trading volumes are also starting to recover, up $1,000,000,000 from yesterday as investors fight back against the falling value.
New bullish support has already taken the asset out of the oversold region and is positioning well to retest the flipped resistance level above.
Will we see the #1 cryptocurrency enter back into the falling wedge pattern and push on to new heights? Let’s take a look.
The Story So Far
In the BTC/USD chart over 4hr candles we can see that BTC was tracking well inside the bullish falling wedge pattern until the most recent bearish episode, which CNBC later dubbed ‘Bitcoin’s Funeral’. Heavy selling pressure at this stage kicked the asset out well below the strong pattern support, down past the 0.5 fib level.
Once BTC hit the oversold region for the first time, we can see a brief change in sentiment occurred as investors re-entered the market to catch the bounce. Unable to break back into the pattern on this first attempt, the bears regained dominance and pushed BTC back down below $6,000 where we achieved the new low price point for this year.
Once again, BTC was oversold here and bullish support managed to equalize with a second push back up to the flipped resisting level of the pattern.
The Story Now
Looking forward, Bitcoin is looking like it could break through the bearish zone and back into the pattern, with the RSI holding well in the middle of the channel and MACD showing a bullish divergence back towards the zero line.
With tether volumes trading at an all-time high right now though, it could take time for sufficient bullish support to gather with enough force to take BTC onward and upward towards $7,000; as more money continues to bleed out of Bitcoin into more stable pegged value assets.
Back inside the falling wedge pattern we can see a new green zone for BTC between the $6,300 and $6,800 where we’re likely to see some new support and resistance levels for BTC as it makes its next move up.
Be wary of a bull trap as BTC reaches the 0.236 fib level! As you can see in the falling wedge above, the asset has already been pulling away from the upper pattern resistance as demand progressively dwindles. If Bitcoin is able to suddenly spike towards this fib level, we will need some proof that market sentiment is legitimately changing to warrant a bullish continuation.
If it does turn out to be a bull trap, we should expect a harsh correction back to the base support (follow yellow arrows) before rebounding back into the green zone.
This article appeared first on Cryptovest
