Bitcoin staged a strong surge to $8450 recently and has since retreated from this run, signaling a potential correction to draw more buyers in. Applying the Fibonacci retracement tool on the latest swing low and high shows that the 61.8% level lines up with the former resistance and channel bottom around $7200-7400.
This is also close to the 200 SMA dynamic inflection point. The 100 SMA is above the longer-term 200 SMA to signal that the path of least resistance is to the upside or that the uptrend is more likely to resume than to reverse. Also, the gap between the moving averages continues to widen, reflecting stronger bullish momentum. The 100 SMA might also hold as dynamic support on this latest test as well.
Stochastic is pointing up to confirm that bullish momentum is in play. However, this oscillator is nearing overbought conditions to signal that buyers may be getting exhausted and willing to let sellers take over from here.
RSI is also pointing up and has more room to climb, hinting that bitcoin could be ready to revisit the swing high near the top of the channel or rally to new highs closer to $9000.
Traders are expecting another leg higher for bitcoin as the tax deadline is about to pass and investors could be ready to reopen their positions. Historically, Q2 has proved to be a positive quarter for bitcoin so market participants are likely to take advantage of this tendency.
It was also reported that Coinbase bought one of the biggest startups in the industry, former bitcoin mining operation 21 Inc. that is now Earn.com. This is a social network that gives users incentives to complete tasks in exchange for cryptocurrency rewards.
According to Earn.com:
“Earn has built a paid email product that is arguably one of the earliest practical blockchain applications to achieve meaningful traction. We will keep Earn’s business running because it’s showing a lot of promise and potential.”
*The market data is provided by TradingView.