Bitcoin has formed higher lows and higher highs to trade inside an ascending channel visible on its 1-hour time frame. Price just bounced off the top and looks prime for another test of support.
Applying the Fibonacci retracement tool on the latest swing low and high shows that the 61.8% level lines up with the channel bottom around the $6,450 mark. It also coincides with an area of interest where buyers might be waiting to add to their long positions.
The 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside or that the uptrend is more likely to resume than to reverse. This moving average also lines up with the 50% Fib to add to its strength as support while the 200 SMA is closer to the channel bottom. The 38.2% level is in line with the mid-channel area of interest, although it seems there is some bearish pressure left in play.
Stochastic is moving lower after all, indicating that sellers could still take bitcoin much lower from here. RSI is also pointing south to signal the presence of selling momentum that could spur a deeper correction. A break below the channel bottom, however, could take bitcoin to the swing low or lower.
Bitcoin’s recent gains are being attributed to the Morgan Stanley report having a bullish outlook for the year on account of rising institutional interest. This was supported by Overstock’s CEO who noted:
“People turn to it where they collapse, like Venezuela or Cyprus or Syria, something like that. When people start getting into it is when their own financial systems collapse. So yes, given that I think the entire modern financial system is a big Keynesian, magic money tree Ponzi scheme, I do expect that the day will come when people turn to crypto.”