Bitcoin’s recent fall in mining hash rate was one of its sharpest declines since its inception, with the same being discussed in a recent article. While the king coin has noted constant selling pressure by traders and miners alike, big players have been called upon to rescue the world’s largest digital asset from its latest lows.
Having said that, BTC noted a recovery as buyers returned to the market. In fact, BTC’s movement led to the formation of an ascending triangle and an upward breakout was on the cards. At the time of writing, BTC traded at $35,449, up by 5% over the last 24 hours.
BTC 4-hour chart
Since touching a low of $28,600 on 22 June, Bitcoin has done well to reclaim lost ground. Minor corrections have been regular in the market, but BTC managed to find support at higher levels of $30,000 and $33,000. This formed the lower trendline of BTC’s ascending triangle.
The upper trendline of the pattern represented a resistance zone of $36,600. A close above this level could trigger an upwards breakout from the pattern and push BTC towards its 78.6% Fibonacci extension present around the $37,460 mark. However, BTC did face some short-term challenges. Its current price level clashed with the 61.8% Fibonacci extension and the 4-hour 200-SMA (green). Interestingly, this area also coincided with the 12-hour 50-SMA (not shown) and was a crucial area to retake for the bulls.
Reasoning
BTC’s indicators suggested the possibility of an upwards price swing moving forward. Directional Movement Index maintained a bullish narrative as +DI and -DI diverged at the time of writing. ADX picked up from 16 and meant that BTC could see some sideways movement before a stronger trend emerged. Relative Strength Index entered bullish territory as buying pressure seeped into market.
Finally, Squeeze Momentum Indicator noted rising momentum on the buyers’ side. These were positive signs for BTC and the same would be amplified in case of a rise above key levels in the coming sessions. A close above $37,000 could initiate a comeback towards 14th June swing high of $41,000- something that would represent gains of 16% from its current price level. However, bulls must also be cautious of the next wave of selling pressure as losing out on the 38.2% Fibonacci level ($32,900) would invalidate the pattern and diminish chances of a favorable outcome.
Conclusion
BTC had to surpass some short-term hurdles in an attempt to reclaim $41,000, but the indicators did tilt towards a bullish outcome. However, traders must be cautious of getting too optimistic. If the next wave of selling pressure drags BTC below the $33,000 mark, its bullish setup would be negated.