Bitcoin is still in a holding pattern below the $104,000 mark, signaling either a potential continuation on a break above this bullish flag or a market correction on a breakdown.
In the latter event, the Fibonacci retracement tool indicates key support zone to keep tabs on, as these could attract increased upside pressure and buying interest. In addition, a short-term rising trend line connecting the lows since early April could also serve as a extra layer of support.
Bitcoin Support Zones
The recent rebound from the $77,100 support back in April has pushed bitcoin back on a steady uptrend, with rising lows forming over the past weeks. Currently trading at $103,963, BTC/USD is seeing sustained upside momentum but whether or not the trend gains traction soon depends on the direction of the potential breakout.
In particular, a strong green candlestick forming above the current highs could confirm the bullish flag continuation pattern and set off a rally that’s the same height as the mast. On the other hand, a break below the consolidation lows around the $102,500 zone could signal that a larger correction is in the works.
In this case, the 38.2% Fib could attract buying pressure around $100,732, followed by the 50% Fib at $99,132. A larger pullback could dip to the 61.8% Fib at $98,131 close to the rising trend line support and 200 SMA dynamic inflection point.
Mixed Momentum Clues
The 100 SMA remains above the 200 SMA on the chart, suggesting that the long-term uptrend is still intact despite the recent pullback. The gap between the moving averages has widened significantly to reflect the latest surge, indicating stronger bullish momentum.
Both oscillators displayed at the bottom of the chart are showing conflicting signals. The stochastic oscillator is approaching the overbought territory, suggesting that the recovery rally might be losing steam. A turn lower from current levels would signal that bears are regaining control and could push prices back toward the $93,920 support zone.
Meanwhile, the MACD appears to be crossing above its signal line with green histogram bars forming, indicating short-term bullish momentum is building. This divergence between the two momentum indicators suggests we could see choppy price action in the coming days as bulls and bears battle for control.
From a broader perspective, Bitcoin is still maintaining its longer-term uptrend that began in mid-2023, with the ascending trendline visible on the chart providing dynamic support. The current retracement appears to be testing this trendline, making the current price action particularly significant for the longer-term outlook.
The sharp rally from early May suggests institutional dip-buyers remain active, potentially accumulating bitcoin at lower prices. However, the cluster of resistance levels overhead could prove challenging to overcome without a significant catalyst.
Traders should watch for reversal candlestick patterns near the current Fibonacci support levels, which could signal a resumption of the bullish trend. Conversely, a daily close below the 61.8% Fib could attract selling pressure and could keep bitcoin in range.