Omkar Godbole Nov 5, 2019 at 11:00 UTC
A four-month falling trendline proved a tough nut to crack during the Asian trading hours and reversed bitcoin’s rise from $9,200 to $9,500. The outlook, however, would turn bearish only below the 200-day average support at $9,127.
The pullback from $9,500 to $9,200 lacked volume support and could be short-lived.
A high-volume UTC close above $9,470 is needed to confirm an upside break of the multi-month falling trendline and open the doors for $13,880 (2019 high).
Acceptance below the 200-day MA would weaken the immediate bullish. The resulting sell-off to $8,500, if any, will likely be transient.
Bitcoin’s (BTC) struggle for a bullish breakout continues with a falling trendline capping gains for the fifth time in 11 days.
The top cryptocurrency is currently trading in the red near $9,300 on Bitstamp, having faced rejection near $9,470 – the resistance of the trendline connecting June 26 and Aug. 6 highs – during the Asian trading hours.
The four-month trendline sloping downwards from the 2019 high of $13,880 first came into play on Oct. 31. On that day, prices clocked a high of $10,350 but failed to print a UTC close above the resistance line.
Similar price action was seen on the following two days and on Monday when prices rose from $9,200 to a one-week high of $9,586 but failed to beat the trendline hurdle.
The repeated failure to scale the multi-month downtrend line may force some investors to question the sustainability of the recent rise from five-month lows below $9,500.
However, such fears may be premature, as prices are still holding above the 200-day MA support, a barometer of long-term market trends, as seen in the chart below.
BTC is again struggling to get past the descending trendline, currently at $9,470. Even so, it is early to call a bearish reversal, as the 200-day MA support at $9,127 is intact.
The average has been restricting downside since Oct. 30, having worked as resistance multiple times in the 16 days to Oct. 11.
All-in-all, BTC is being squeezed between the long-term average support and the falling trendline resistance.
A high-volume UTC close above $9,470 is needed to confirm an upside break of the falling trendline. That would imply a resumption of the bull market from lows near $4,100 seen at the beginning of April and open the doors for resistance at $13,880.
On the downside, acceptance below the long-held 200-day MA support at $9,127 will likely invite stronger selling pressure, leading to a drop to $8,500.
A bullish breakout looks likely, as the cryptocurrency tends to pick up a strong bid six months ahead of reward halving, as discussed last week.
Note that the recent pullback from $10,350 lacked volume support. Essentially, it represents a bull breather and could be reversed.
BTC jumped from $9,273 to $9,586 in the 60 minutes to 22:00 UTC on Monday with buying volume (green bar) hitting the highest level since Oct. 31.
Indeed, the spike has been erased with prices falling to $9,165 a few hours ago but with weak trading volumes. Therefore, the possibility of BTC rising back to highs near $9,600 cannot be ruled out.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
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