Bitcoin seems to be completing its correction from the upside break and could be ready to resume the climb. The recent consolidation also resembles a bullish flag continuation pattern.
Applying the Fibonacci extension tool shows the next potential upside targets. The 38.2% level lines up with the swing high and $3,800 level that could serve as a take-profit point. Stronger bullish pressure could take it to the 50% extension at $3,839.6 or the 61.8% level at $3,886.1. Sustained buying momentum could take Bitcoin up to the 78.6% extension at $3,952.3 or the full extension at $4,036.7.
The 100 SMA is still below the longer-term 200 SMA to indicate the path of least resistance is to the downside. In other words, there’s still a chance for the selloff to resume. Then again, the gap between the moving averages is narrowing to reflect slowing bearish pressure. A bullish crossover could spur a pickup in buying momentum and a continuation of the reversal.
RSI still has some room to head south before indicating oversold conditions, so bitcoin might follow suit while sellers have the upper hand. Stochastic is also heading lower to reflect the presence of bearish momentum, but this oscillator is closing in on the oversold region to signal exhaustion. Turning higher could confirm that buyers are about to take over.
Bitcoin appears to be kept afloat by renewed bullish forecasts by more and more analysts. A few days back, a known cryptocurrency expert tweeted that Bitcoin could reach $5,000 over the next 10 days. Some claim that the recent rally signals that price has now bottomed out and has nowhere to go but up, especially given the catalysts in the coming months.
The main one among this is the launch of Fidelity’s institutional platform planned for March. This could usher in stronger volumes and demand from banks and big funds, likely drawing more retail traders in as well.
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