- Descending channel support has been tested severally; upward breakout could catapult Bitcoin to $8,600.
- The short-term trend is bearish but strong support exists at $7,700.
Bitcoin has been lethargic since it slipped under $8,000 again during the weekend session. While the downside is strongly supported above $7,600, the upward movement remains to be capped in the short-term.
However, looking at the 30-minutes chart for XBT/USD, we can spot a detailed trend within a descending channel. This trend clearly shows the performance of Bitcoin in the recent downtrend that began at the beginning of October. Both sides of the channel have been tested numerously and proven to be air-tight strong.
Presently, Bitcoin is trading at $7,817 while testing the channel support. In the event a bounce occurs and Bitcoin is pushed above the moving averages (both the 50 SMA at 7,925 and the 100 SMA at 8,011), the buyers will get a boost not only above $8,000 but also towards $8,600.
XBT/USD 30-minutes chart
Meanwhile, looking at the chart from a technical perspective I can observe short-term bearish momentum building. The relative strength index (RSI) is holding ground at 40, although it has retreated from 48; posted earlier in the day. The gap between the 50 SMA under the 100 SMA suggests that selling pressure could continue to dominate. Moreover, the fact that the double-cross took place at $8,147 signals that a lower consolidation will take place before the next recovery rally.
Therefore, it is important for Bitcoin longs traders to focus on the longer timeframes targeting regions around $8,600. Improving technical picture, strong support at $7,700, channel support and higher volume will all help to support a breakout towards $8,600.
XBT/USD Key Technical Levels
Spot rate: $7,827
Relative change: -32
Percentage change: -0.38%