Bitcoin was able to break past a short-term descending trend line to signal that a reversal from the downtrend is in order. Price is pulling back to the broken resistance, which now seems to be holding as support.
However, the 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. This suggests that the selloff is more likely to resume than to reverse. Then again, the gap between the moving averages is narrowing to indicate that bearish momentum is fading and that a crossover might be due.
In addition, the moving averages line up with the broken trend line, adding to its strength as support. In that case, the price could move up to the Fib extension levels next. In particular, the 50% extension lines up with the swing high at $6,600 then the 61.8% extension is close to the $6,700 level. Stronger bullish momentum could take it up to the 78.6% extension at $6,828 or the full extension at the $7,000 major psychological mark.
Bitcoin is once again experiencing some downside pressure as it reacts to a warning by Coinbase CEO Armstrong who said that mass adoption could take longer than expected. He mentioned:
This technology is going through a series of bubbles and corrections, and each time it does that, it’s at a new plateau. People’s expectations are all over the map, but real-world adoption has been going up.
He also warned that governments in some countries could keep moving to restrict these altcoins but that countries riddled with financial troubles like Venezuela or Turkey could be good test cases. He said:
I’m bullish on countries that are going through economic crisis, over the next three to five years, where everyone has the internet and a smartphone, you could see people adopting bitcoin and cryptocurrencies as an alternative.
Image courtesy of TradingView
