Bitcoin May Need to Pause
Bitcoin has surged more than 50 percent from its July 20 low, but now the rally may see a pause.
Notice how the recent peak near $47,000 almost exactly matches the low from April 25. It’s also near the same level below which sellers got aggressive May 16-18. This is the most significant resistance area Bitcoin has yet faced in the current rebound.
Next, stochastics have been in an overbought condition that’s often marked tops. Buyers may look for some retracement before piling in again.
The third point is illustrated by our custom script Moving Average Speed, which plots the rate of change on the 100-day simple moving average (SMA). Looking back at the 10 years of history on this chart, Bitcoin has never sustained a rally when the indicator was falling like it is now. That suggests it may need more time to flatten out before price can make another turn upward.
Finally, consider the $40,000 level. Aside from its obvious psychological importance, it was near tops in early January, late May and mid-June. This may be a zone Bitcoin retests before rallying again. (Some traders may even look for a deeper probe of the early-August lows around $37,500.
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Notice how the recent peak near $47,000 almost exactly matches the low from April 25. It’s also near the same level below which sellers got aggressive May 16-18. This is the most significant resistance area Bitcoin has yet faced in the current rebound.
Next, stochastics have been in an overbought condition that’s often marked tops. Buyers may look for some retracement before piling in again.
The third point is illustrated by our custom script Moving Average Speed, which plots the rate of change on the 100-day simple moving average (SMA). Looking back at the 10 years of history on this chart, Bitcoin has never sustained a rally when the indicator was falling like it is now. That suggests it may need more time to flatten out before price can make another turn upward.
Finally, consider the $40,000 level. Aside from its obvious psychological importance, it was near tops in early January, late May and mid-June. This may be a zone Bitcoin retests before rallying again. (Some traders may even look for a deeper probe of the early-August lows around $37,500.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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