Bitcoin has pulled back on its climb over the past couple of days, but seems ready to resume the climb from here. Applying the Fibonacci extension tool shows the next potential upside targets.
The 38.2% extension lines up with the swing high around the $8,500 level but stronger bullish momentum could take bitcoin to the 50% extension at $8,629. From there, a continuation of the uptrend could lead to a test of the 61.8% extension at $8,912 or the 78.6% extension at $9,316. The full extension is located at $9,831.50.
The 100 SMA is still above the longer-term 200 SMA on this time frame, confirming that the path of least resistance is to the upside. In other words, the uptrend is more likely to resume than to reverse.
However, the gap between the moving averages appears to be narrowing, indicating weakening bullish momentum. If this keeps up, bitcoin could be due for a larger pullback to the next area of interest closer to the 200 SMA dynamic inflection point.
This happens to line up with a former resistance level around $6,800 to $7,000 and the rising trend line connecting the lows since June. This might be the line in the sand for a correction, though.
RSI is already pulling up after recently reaching oversold territory, suggesting that bulls are ready to charge again. A bit of bullish divergence can also be seen as price made higher lows while RSI had lower lows since the second week of July.
Stochastic is also turning higher after reaching oversold levels, which means that buyers could take control of bitcoin price action again.
Cryptocurrencies have had a rough start to the week as the catalysts haven’t been exactly positive. For one, HitBTC announced an outage due to hardware problems, sparking fears of a hack even though they assured clients that their funds are safe. This led traders to be more skeptical in reacting to news that South Korean authorities are looking to end tax breaks to cryptocurrency exchanges, which could weigh on activity and profitability.
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