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Bitcoin could be due for a reversal from its slide as it just broke past the top of a descending channel.
Bitcoin was previously trending lower inside a descending channel but has just broken past the resistance to indicate that a reversal is due. Price has also closed above the 100 SMA dynamic inflection point as an additional bullish signal.
However, the 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the downtrend is more likely to resume than to reverse. Price has yet to test the 200 SMA dynamic inflection point which might also lead to some bearish pressure.
RSI has also reached the overbought zone to indicate that buyers are starting to feel exhausted. Similarly stochastic is in the overbought area to signal that buyers might want to take a break. Turning lower could confirm that sellers are about to take over, possibly pushing bitcoin back inside the channel and onto the lows.
Still, it’s also worth pointing out that both oscillators are pointing up for now and have yet to show any inclination to head south. This suggests that bulls could keep charging.
Also, bitcoin is forming a double bottom pattern with the latest move and could be due to test the neckline at $4,200. A break beyond this could spur a rally that’s the same height as the chart pattern, which is around $400. Increased bullish momentum could lead to technical breaks of the next areas of interest, that might draw even more buyers in.
Indications that institutions are pushing ahead with crypto investments despite the recent bear market are making it to the newswires. Confirmation from a few key figures in the industry also led to the improvement in sentiment that is likely driving the recent moves.
Rachel Lee by Rachel Lee November 28, 2018
