Bulls in Control: Bitcoin finds price support at $8,400
Bitcoin price action has been relatively steady, with the all-important $8,400 support zone holding.
Having put in an impressive surge at the end of last week, bitcoin has now dropped from its year-to-date high of $8,939 (Bitstamp). At the time of writing, it is trading at $8,600, having fallen as low as $8,521.
This pullback is moderate and expected, after such a strong move up – or series of strong moves up, since bitcoin has more than doubled in price over the past two months. There is clear price support support around $8,300–$8,400 zone. Bitcoin dropped back at the $8,300 mark earlier this month, and $8,400 was a local high back in July last year as the bear market stretched on. This resistance should now turn support, and we can expect bitcoin to pause here at the very least, if not bounce from those levels, if it falls that low.
38% fib support
Bulls are clearly in control and bitcoin shows no immediate signs of dipping that far. Following its Sunday spike, BTC has pulled back to the 38% fib level, slightly above $8,500. Strong positive sentiment suggests that traders may be cautious about selling, even though profit-taking at this point should be the norm. On the 4-hour chart, RSI is now relatively neutral, and on the 1-hour it is approaching oversold, even as it remains overbought on the weekly and 3-day charts, and borderline overbought on the 1-day. This suggests that, while a larger correction is overdue, in the short term we might see another push upwards.
Immediate targets to the upside lie in the $9,500–$10k zone, where BTC saw a local high a year ago, last May. $10,000, of course, is a strong psychological barrier and was a major milestone on the way up to $20,000 in 2017.
However, there is comparatively little resistance anywhere after this. $12k may prove the last big area to break for the bulls, before a final move back towards the all-time high – and potentially beyond. But this is unlikely to occur in one swift move, despite the strength of the parabolic move to date. In the medium-term, a retest of old support would prove a more healthy and sustainable foundation for a longer bull market.