Bitcoin shrugged its shoulders News of a regulatory crackdown in China rising 24% from its recent lows, but a sustained recovery could still be delayed by strong technical resistance in the $ 34-37,000 range.
The world’s leading cryptocurrency plunged to a five-month low of $ 28,600 on the Bitstamp exchange on June 22, before rising to $ 35,517 three days later.
Its rebound was halted by a downward sloping trendline that has dragged the price down six times since mid-May. Rising trend lines act as support and resistance lines once widely identified by traders, creating either a floor for price action to rebound or a ceiling for the bearish momentum to resume.
The strength of a level typically increases with the number of touches and rejections.
A false breakout occurred on June 13th as the price rose to its recent high of $ 41,341 before falling back below the trendline.
The failure of the trendline to become a support level after the initial crossover was encouraging for the bears, who then pushed Bitcoin to its 22nd March low. News of a restrictive sentiment at the US Federal Reserve linked to a Bitcoin mining ban in China.
The rejection also came around the exponential moving average of 200 on both the 4-hour and daily charts – a rare synchronicity across time frames that increases the likelihood of interacting with price.
At the time of writing, Bitcoin was trading around $ 33,000 after encountering short-term resistance at the exponential moving average of 50 on the 4-hour chart.
Movement above this level is followed by three resistance bands on the same chart: the declining trendline (currently $ 34,600); the 144 exponential moving average ($ 35,700); and the 200 exponential moving average ($ 37,000). The two moving averages are largely parallel, falling at a rate of around $ 300 per day.
Success on all fronts would pave the way for a quick surge to $ 41,000, which has seen resistance twice since May.
Market watchers will also keep a close eye on the higher timeframe monthly chart, which started at $ 36,893 in June, according to UK financial derivatives trading platform IG.
A closing price on Wednesday above, at, or near the opening of the month will result in a long-tail candle – commonly viewed as a bullish signal because it suggests that the market has tried to hold lower levels but failed.
This scenario would also mean that the price will move back above the 10-month exponential moving average, raising hope that the downturn has ended since April.