‘Cagey’ Rebound on BTC/USD?

‘Cagey’ Rebound on BTC/USD?

Since BTC/USD (Bitcoin versus the US dollar) rebounded from the 200-day simple moving average (SMA) earlier this month at US$78,111, speculative bullish interest has been uninspiring.

Further Downside

As far as I can see, the major crypto pairing demonstrates scope to continue exploring south until it reaches support from US$68,926 on the monthly timeframe (I also noted this in previous analysis), which (somewhat) helps explain why technical demand from the 200-day SMA could be lacking.

Another technical observation supporting the lacklustre bullish showing is the Relative Strength Index (RSI), recently exiting overbought territory and fast approaching the neckline of a double-top pattern on the monthly chart, extended from the low of 60.44. A break beyond this line highlights the RSI’s 50.00 centreline threshold as a possible downside target. Adding to this, the RSI on the daily chart may have rebounded from oversold territory (forming a possible double-bottom), but remains south of 50.00 and is shaking hands with resistance around 45.46.

Monthly/Daily Support Area Warrants Attention

While I am not saying that a move to the upside won’t be seen, the path of least resistance appears to be to the downside, at least targeting space below the 200-day SMA at daily support from US$73,575. So, for me, the playbook here will be watching for possible fading opportunities at the underside of the daily range between US$108,396 and US$91,591 (which happens to converge closely with the 50-day SMA at US$93,608 and trendline resistance, extended from the all-time high of US$109.580). Alternatively, we could see price sell-off at current levels and aim for the noted daily support. It is this level, coupled with monthly support mentioned above at US$68,926, that I expect to see bulls attempt to make a show. 

Charts created using TradingView

Written by FP Markets Market Analyst Aaron Hill

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