Bitcoin [BTC] has been moving steadily within a clearly defined downward channel for a period exceeding seven months. Following a bounce from the $53.8K support level earlier in the current month, BTC has surged by close to 18%, approaching the upper limit of the channel.
The critical question now is whether the bullish investors can break through this resistance level and trigger a breakout, or if they will be overcome by another downward trend.
Currently, BTC is being traded at approximately $63,446. Recent market activity has displayed a battle between buyers and sellers, with Bitcoin teetering on the edge of the established pattern.
Recovering from Crucial Support
It is noteworthy that the 20-day EMA has recently surpassed the 200-day EMA, indicating a ‘golden cross’ on the daily chart. Historical data suggests that following such a crossover, there is usually a sustained uptrend in the price of Bitcoin.
A successful breakout above the current level could pave the way for a prolonged rally towards the range of $67,000 – $70,000.
Nevertheless, the price has not yet breached the upper boundary of the downward channel. Failure to do so might result in a brief pullback. A rejection at this point could trigger a retreat towards levels of $60,000 or potentially $55,838.
At the time of writing, the RSI was measured at around 62.52. It remained above the neutral 50 level, indicating a strong bullish sentiment, although it had not yet reached the overbought territory. This suggests that there is still room for growth if the bullish momentum continues.
It is important to observe that the RSI has been marking higher highs while price movement has been showing flatter highs. This situation signals a possible bearish divergence in the price action.
Conversely, the MACD (Moving Average Convergence Divergence) indicator has reconfirmed the bullish momentum, with the MACD line positioned above the signal line.
Insights from Derivatives Data
The trading volume for BTC has fallen by 19.93% to reach $47.39B, indicating relatively subdued market activity. Likewise, open interest has decreased by 0.58%, suggesting that traders have been cautious about taking new positions at current price levels.
In the last 24 hours, the long/short ratio stood slightly bearish at 0.9869, reflecting a balanced market sentiment with a slight inclination towards short positions.
However, prominent traders on Binance have displayed greater confidence in the bullish outlook, with a long/short ratio of 1.0172.
The ‘golden cross’ pattern formed by the 20-day and 200-day EMAs suggests a potential bullish trend, although traders are advised to wait for confirmation through a decisive close above the upper limit of the downward channel.