BTC Price Analysis: Is Bitcoin (BTC) Following the Bump & Reversal Theory?
Currently trading at $5,253 with 24-hours loss of 0.71 percent, Bitcoin continues to struggle at an overhead resistance which is the weekly 50 EMA that is intersecting “exactly” with the 61.8 percent Fibonacci retracement that was produced from the November decline from $6k to $3k.
Moving upwards, the leading cryptocurrency would find another big resistance at $5,500, from the low on November 12th, 2017 which the recent high was rejected at. However, BTC has surpassed the descending triangle.
In his latest analysis, crypto analyst Magic Poop Cannon says that after being rejected at $5,500 but remaining above the newly found support, we are at a critical retracement level at 61.8% while at the same time testing a critical moving average of weekly 50 EMA.
From a probability standpoint, he says there is a much higher chance that we will fall versus the probability that BTC will continue to rally. Though if we do move higher, the upside is likely to be “very limited” as weekly 50 MA is falling towards price action and if the leading cryptocurrency breaks out higher, it would have to “contend” with that. Moreover, moving up, there is an ultimate resistance zone between $5,777 and just above $6k.
Since the beginning of March, Stochastic RSI is pegged on 100 while daily RSI came off its near-record overbought territory and MACD showing signs of exhaustion after going through a bearish crossover a couple of days ago.
Analyzing The Bump & Reversal Theory
Talking about the bump and reversal theory that is running in the market, Magic says though he is of the opinion that bottom is in, he isn’t really sure about this theory. But he studies the Bitcoin chart to see how this theory stacks up with the technical requirements required for this bump and run reversal.
To start with, lead in trendline is 23° which is below the preferable range which is an angle of 30 to 45 degrees. Meanwhile, the bump phase is in line with the required angle (between 45 and 60 degrees) at 54°.
For bump validation, the distance of lowest low of the bump to lead in should “at least” be twice the distance of lowest low of lead-in to lead in but this is not the case and hence bump wasn’t validated. But we did see bump rollover when the price rose from the lows.
When it comes to volume, its progress is consistent with that of the bump and run reversal volume requirements. Moreover, potential resistance turned support levels can also be identified.
Another point is run phase that begins when the pattern breaks support from the lead-in trend line and once it breaks, the run phase takes over and the rally continues which means we are in fact it the run phase.
Though we are not in a perfect textbook bump and reversal pattern, it could be confirmed that the bottom is in. But Magic says overhead resistance is too great to be broken right now and furthermore indicators show clear exhaustion.
“We should expect price to return to the lead in trendline, to test it for support…From there… Bitcoin will progressively become more bullish.”
Live Bitcoin (BTC) Price:
1 BTC/USD =$27,818.0527 change ~ -0.48%