BTC is trading at $3,630 on Bitstamp, representing a 2.5 percent gain on a 24-hour basis. Meanwhile, the 10-week SMA is located at $3,919.
It is worth noting that a full confirmation of a longer-term bullish reversal would be a convincing break above the former support-turned-resistance of the 21-month exponential moving average (EMA), currently at $5,400.
As seen above, BTC repeatedly failed to cross the 10-week SMA on a weekly closing basis (Sunday’s, as per UTC) before falling below $6,000 on Nov. 14.
Prior to that, BTC did cross the 10-week SMA in the last week of both February and April, the third week of July and in the last week of August. These bullish breakouts, however, were short-lived: BTC fell back below the 10-week SMA in the following two weeks, trapping the bulls on the wrong side of the market (marked by arrows).
Put simply, the cryptocurrency has struggled to breach the 10-week SMA throughout the ongoing bear market.
As a result, only a sustained break above the 10-week SMA (at least four weekly candles above the average) would imply bullish reversal.
The outlook remains bearish as long as prices are trading below the downward sloping 10-week SMA of $3,919.
BTC closed back above $3,566 (Dec. 27 low) yesterday, establishing a sideways channel on the daily chart.
With the weekly chart still biased toward the bears, the lower end of the channel, currently at $3,465, could be breached soon. A channel breakdown, if confirmed, would boost the prospects of a drop to the December low of $3,122.
- A sustained break above the 10-week SMA could be considered an early sign of long-term bullish reversal, although prospects of a near-term move above that average look bleak.
- A channel breakdown on the daily chart would bolster the bearish setup and allow a test of demand around the December low of $3,122.
Categories: Crypto Currency