As per a recent article, Bitcoin was heading towards an upward breakout in the coming month. Several factors such as the increase in net growth users, whale holding and accumulation by traders indicate many positive with regards to BTC’s long-term trajectory.
What remains uncertain is its near-term movement which has been haphazard over the past few days. A bullish start to the day saw Bitcoin climb momentarily above its 50% Fibonacci Extension but this move seemed to be swiftly denied by the sellers. Gains diminished over the past couple of sessions as the king coin fell below the $34K-mark and headed back towards the lower trendline of its ascending channel.
Bitcoin 4-hour chart
Source: BTC/USD, TradingView
After Bitcoin bounced back from the $32K mark on the back of a sharp retracement, an ascending channel was spotted on its chart. Although BTC climbed above its 50% Fibonacci Extension level at $34,237, a rise above its up-channel failed to materialize as prices moved back within the pattern. The lower trendline coincided with the 20-SMA (red) and was an important area for bulls to defend this region from a breakdown over the coming sessions. A close below the shorter-term moving average line could result in another 2.4% decline towards the $33,000 level.
Reasoning
Stochastic RSI underwent a bearish crossover in the overbought region and indicated some downside moving forward. The Directional Movement Index, although still indicative of a bullish trend, converged at the time of writing. If the -DI crosses above the +DI, a bearish outcome can be expected. On the other hand, EMA Ribbons moved below the candlesticks and provided some extra buffer against a price drop. If buyers maintain BTC above the $33,600- mark, a temporary surge can be expected back above the 50% Fibonacci Extension.
Conclusion
At the time of writing, Bitcoin tested an important defensive region of $33,600- one that could determine its near-term movement. Since the aforementioned level was backed by multiple Moving Average lines, a breakdown could be avoided and short-term push can be expected back above the 50% Fibonacci Extension at $34,327, representing a rise of nearly 3% from its press time mark.
