- The falling wedge pattern suggests that Bitcoin is grinding towards a breakdown.
- $8,700 comes out as a strong support area but the immediate upside is capped by the 50 MA.
Bitcoin bulls are working extremely hard to keep the price above $8,700. This follows a shallow recovery from a previous dip towards $8,500. Bitcoin is trading at $8,740 and battling the resistance offered by the 50 Moving Average (MA) on the 1-hour chart.
XBT/USD 1-hour chart
A broader look towards $9,000 reveals more resistance at $8,800. Slightly above this, the 100 MA is pressing down on Bitcoin’s attempted recovery. From a technical point of view, the buyers have started to gain traction. The Relative Strength Index (RSI) is forging a recovery towards the average. The continued movement towards the overbought is likely to stir bullish action for Bitcoin.
The formation of the rising wedge pattern confirms that Bitcoin is bullish in the short-run but remains bearish in the long term. The pattern is used in classical technical analysis to signal a reversal in a continues up-trending market.
In this case, Bitcoin will eventually drop under $8,000 and explore the levels towards $7,300 (October support). At this point, fresh demand will be created forcing a recovery similar to the one that sent skyrocketed BTC to highs above $10,500 last month.
For now, the best the bulls can do is to sustain the price above $8,700 and focus on breaking down the Moving Averages resistance.
Bitcoin Key Technical Levels
BitMEX Index price: $8,729
Volume: $2.1 billion
Open Interest: $824 million
Trend: Bullish short term
Support $8,700 an $8,500
Resistance: $8,800 and $9,000