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Bitcoin Making Little Headway as Resistance Caps Price Gains
- Bitcoin is struggling to cross the 50-day moving average hurdle for the fifth straight day. The repeated failure at that key hurdle has neutralized the bullish outlook put forward by Friday’s falling wedge breakout.
- A convincing move above $3,630 (50-day MA) would revive the short-term bullish outlook and open the doors to $3,730 – the neckline of a potential inverse head-and-shoulders bullish reversal pattern on the 4-hour chart. A violation there would confirm a bearish-to-bullish trend change and could yield a rally to $4,130 (target as per the measured move method).
- The bears could make a comeback if the 50-day MA hurdle remains intact for another 24 hours, pushing prices below $3,400.
Bitcoin’s struggle to cross a key moving average lined up above $3,600 is a cause of concern for the bulls.
The leading cryptocurrency by market capitalization is currently trading at $3,575 on Bitstamp, having faced rejection at the widely followed 50-day moving average (MA) hurdle at $3,629 earlier today.
Notably, that average line has been capping upside since Friday, countering expectations of a quick move toward $4,000 built following the high-volume falling wedge breakout.
The sideways action below the 50-day MA has also invalidated the bull flag pattern created on the 4-hour chart over the last three days.
So, the bullish case appears to have weakened and the probability of a drop to levels below $3,400 would rise if the 50-day MA hurdle remains intact for another 24 hours.
As seen above, the odds are stacked in favor of the bulls: the 5- and 10-day MAs are trending north, validating the falling wedge breakout. The 14-day RSI is reporting bullish conditions above 50.00.
Even so, BTC is struggling to find acceptance above the 50-day MA, currently at $3,629. As a result, the bears may feel tempted to hit the market with fresh offers, driving the prices down to the ascending 10-day MA at $3,521.
It is worth noting that the 50-day MA had worked as stiff resistance multiple times in the second half of the last month. As a result, a convincing move above that average is needed to revive the short-term bullish outlook.
BTC is likely creating the right shoulder of an inverse head-and-shoulders pattern on the 4-hour chart. A break above the neckline resistance, currently at $3,730, would confirm a bullish breakout and could be followed by a move higher to $4,130 (target as per the measured move method).
So, while a break above the 50-day MA would revive the bullish outlook, only an acceptance above the neckline hurdle of $3,730 would put $4,000 back on the table.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Author: Omkar Godbole
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