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Bitcoin is looking south, as per the bearish divergence of the 14-day relative strength index and other short-term technical indicators.
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A deeper pullback to levels below $5,000, however, would remain elusive if the 30-day moving average (MA), currently at $5,107 holds ground. That average repeatedly limited losses in March.
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A rebound from the 30-day MA could be followed by re-test of recent highs above $5,600.
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A UTC close below the 30-day MA would strengthen the short-term bearish case and expose the 50-day MA lined up at $4,649.
Bitcoin’s (BTC) short-term prospects are looking bleak, but its close proximity to a historically strong price support level calls for caution on the part of the sellers.
The crypto market leader faced rejection at the bearish (descending) 50-week moving average (MA) last week and ended with a 2.5 percent drop, neutralizing the short-term bullish setup. A similar rejection at that average had ended up killing the nascent bull market four years ago, as discussed on Friday.
Further, with the pullback from five-month highs above $5,600 to $5,000 witnessed last week, the widely-followed 14-day relative strength index (RSI) is flashing bearish.
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So, the path of least resistance appears to be on the downside in the short-term.
That said, investors looking to buy at lower levels may be left disappointed if the 30-day moving average (MA), which consistently applied brakes on price pullbacks in March, again fuels a strong bounce.
That possibility cannot be ruled out, as the longer duration charts are still looking bullish. For instance, BTC is currently sitting well above the widely tracked barometer of a long-term trend, the 200-day MA, currently at $4,438. Other long-term indicators like the 14-week RSI are also reporting bullish conditions.
As of writing, BTC is changing hands at $5,163 on Bitstamp, representing little change on a 24-hour basis, while the 30-day MA is located at $5,107.
Daily chart
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While the 30-day MA had served as strong resistance in January, on Feb. 8, BTC confirmed seller exhaustion by establishing a bullish higher low and closing well above the 30-day MA after a 7.8 percent rise.
The newfound support has reversed price pullbacks ever since. The chart reveals BTC has established bullish higher lows along the 30-day MA throughout the recent rally, from lows near $3,300 to highs above $5,600.
Further, the long-term bullish breakout witnessed on April 2 was preceded by a higher low formation on the 30-day MA on March 26.