After a jaw-dropping six-day rally that saw Bitcoin rally from last week’s lows of $6,850 to a peak of $8,450 — a 23% gain — momentum finally stalled on Wednesday morning, with the leading cryptocurrency retracing hard.
As of the time of writing this, the price of BTC has just plunged to $8,000, creating an eerie daily candle, implying a potential correction back into the mid-$7,000s in the coming days. The reason: $8,400 was a key level to break on a medium-term basis, meaning that Bitcoin’s inability to break past that resistance marks a massive blow to the bull case that has been building over the past few days.
Bitcoin Bull Case Takes Hit
As pointed out by Josh Rager, a prominent cryptocurrency analyst and industry investor, $8,400 has been a key level of support and resistance for Bitcoin over the past few months.
The fact that BTC failed to regain that level on any notable time frames is, according to Rager, a sign that we are “not out of the bear woods yet” meaning that investors must take Bitcoin trades “level by level, day by day.”
Price had an initial rejection off key area $8400s that previously as resistance/support
Watching for a pullback $7800s-$7900s before a bounce and push to the upside for retest
Not out of the bear woods yet, take it level by level, day by day pic.twitter.com/Vby6KexBIQ
— Rager 📈 (@Rager) January 8, 2020
As further accentuated by cryptocurrency content creator “The Moon,” $8,400 is also where Bitcoin’s 20-week simple moving average lies, which is a moving indicator that has been key in indicating macro reversal points for BTC over the past 18 months. On the matter, the analyst wrote:
This moving average has historically marked VERY important turning-points for Bitcoin, both bullish and bearish. A rejection here could lead to a break below $6,000. If broken, BTC could reach $9,450 quickly!
#Bitcoin is currently testing the 20-week moving average.
This moving average has historically marked VERY important turning-points for Bitcoin, both bullish and bearish.
A rejection here could lead to a break below $6,000. If broken, BTC could reach $9,450 quickly! pic.twitter.com/Ud0QCJBZLY
— The Moon 🌙 (@TheMoonCarl) January 8, 2020
Indicators Suggest Rally Not Done Yet
Although The Moon is suggesting that a rejection could bring Bitcoin 25% lower to the $6,000s, analysts have still argued that their short-term indicators imply BTC’s rally is not yet done.
For instance, the 50 exponential moving average and the 200 exponential moving average on the four-hour chart for Bitcoin are still in a bullish cross formation, implying that bulls have not yet lost control on a short-term basis.
Not to mention, the price action on a four-hour chart is still indicative of a medium-term trend reversal to the upside. Per previous reports from this very outlet, Adaptive Capital’s new analyst, CL, noted that the Bollinger Bands indicator shows a bullish trend is currently emerging, and that he will be buying any price dips (such as the current):
“When price starts deviating away from the 4hr 200MA, out of the bands, especially after consolidation, and a BB squeeze, a new trend usually emerges. There is not much more to say, I will be buying dips. Send it.”
Photo by Jonatan Pie on Unsplasht