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This previous support for bitcoin prices is now binding

The weekly Bitcoin (BTC) earnings were swept away over the weekend to a key moving average that previously offered support.

The main cryptocurrency for market capitalization jumped to the highs above $ 6,750 on Saturday, after weakening the immediate bearish case with a repeated defense of the psychological support level of $ 3,500 last week.

BTC, however, failed to secure a UTC closure above 21 days MA. More importantly, the rejection to this MA obstacle was costly – BTC dropped 3.8 percent to $ 3,470 yesterday.

Thus, it could be argued that the MA line, which provided strong support in the two weeks prior to January 10, has now assumed the role of rigid resistance.

At the time of writing, BTC is changing hands at $ 3,527 on Bitstamp, down 4.30% on a 24-hour basis. Meanwhile, the 21-day MA is seen at $ 3,732.

The strong withdrawal from the MA of 21 days indicates that the "sell on rise" mentality is still strong enough. After all, the primary trend is still on the downside, represented by the 10-week decreasing moving average (MA).

The likelihood of a prolonged break below $ 3,500 remains high while BTC is held under the 21-day resistance found in the MA.

Daily chart

As seen above, the BTC failed at the 21-day MA on Saturday and shrunk to $ 3,500, reinforcing the bearish outlook advanced by the 5-day and 10-day exponential moving averages (EMA) and the relative strength index at 14 days (RSI) of 42.00.

As a result, the probability of a decline below $ 3.500 has increased. This would only strengthen the bearish technical configuration and open the doors to the December lows close to $ 3,100.

However, the bearish case would weaken if BTC secured a closing of the UTC on the 21-month MA of $ 3.732.

Weekly chart

The long upper shadow (spread between high and near) attached to the candle last week represents the "sell on rise" trader mentality – after a rapid rise, a selloff has canceled the gains.

The primary trend remains bearish as long as BTC is trading below the 10-week decline in MA.

view

  • BTC's withdrawal from the 21-day MA could encourage bears to push prices below $ 3,500. The acceptance below this level will expose the December low of $ 3,122.
  • A convincing move above the 21-day MA of $ 3,732 would weaken the bearish case and will open upwards towards $ 4,000. However, the primary trend is bearish, so forcing a move over the 21-day MA could be a difficult task for the bulls.

Revelation: The author does not hold cryptocurrency assets at the time of writing.

Bitcoin image using Shutterstock; charts of Trading View

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