Bitcoin continues to post one strong gain after another, but a correction could be due at current levels. Applying the Fibonacci retracement tool shows the potential support areas where buyers might be waiting.
The 61.8% level lines up with an ascending trend line connecting the lows since last week. This is also around a short-term area of interest at $7,750 and the 100 SMA dynamic inflection point. A shallow correction could find support at the 38.2% Fib just above the $8,000 major psychological mark.
On the subject of moving averages, the 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside. This indicates that the rally is more likely to resume than to reverse. However, the gap between the moving averages is narrowing to signal weakening bullish momentum.
At the same time, RSI is turning lower after hitting overbought levels. This suggests that sellers could take over while buyers take a break or book profits off the latest rallies. Similarly stochastic is turning lower from overbought levels to signal a pickup in selling pressure.
Bitcoin has been on a good run so far this week, buoyed by the positive momentum from the earlier week. At that time, institutional interest was seen as the main catalyst for the rebound. This time, markets are focused on the SEC decision on the bitcoin ETF.
Approval could mean more liquidity and higher volumes, which could prove bullish for bitcoin. Then again, the introduction of bitcoin futures last year is also being blamed for the decline in December as it opened the cryptocurrency to short positioning.
For now, risk appetite is also propping bitcoin and its peers higher while traders appear hesitant to put more funds in the dollar. After all, trade-related tensions could escalate anytime and might keep a lid on US growth prospects and Fed tightening plans.