Bitcoin Bulls Hopeful Ahead of Potential Trend Reversal: Key Levels to Watch
This week, Bitcoin traded along a downward-sloping support line, extending its gradual decline that began in early January.
This shift occurred as the cryptocurrency, experiencing nearly a 5% drop on the first day of the week, broke the downward trend after losing crucial support around the 41,000 area.
The support stabilized around $39,500 during a week marked by increased losses, instilling hope that the correction might have come to an end.
Examining the technical aspects, clear indicators are pointing to this region as a robust support point.
Notably, the 3-month EMA at $39,800 is considered a critical dynamic support for Bitcoin, historically triggering meaningful reactions.
Furthermore, the Fibonacci levels derived from the October-December surge remain relevant, with a support line first forming around Fib 0.236 during the correction, followed by a support line at Fib 0.382 at the breakout.
The support line formed by the convergence of the Stochastic RSI, which rebounded from the oversold zone following the ETF approval on January 11, indicates a potential recovery.
Purchases at this support level could signal an impending upward movement. However, decisive resistance levels stand ahead for Bitcoin's trend reversal.
Monitoring the daily chart, we'll track the 8- and 21-day EMAs at $40,670 and $41,800 as dynamic resistances.
A breakthrough above these short-term averages, followed by a clear daily close beyond $42,500, would serve as a recovery trigger, suggesting the technical end of selling pressure.
The sustainability of potential upward momentum in Bitcoin hinges on positive developments, with ETF news playing a pivotal role.
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