Bitcoin Could Shortly Determine the Direction of Its Trend

However, it has created its first lower high on May 13, possibly signaling an upcoming trend reversal.

Ascending Support Line

The Bitcoin price has been increasing since it reached a bottom on March 13, following an ascending support line. The rate of increase accelerated on April 22, and the price has not returned to the ascending support line since. Technical indicators are giving mixed signals: On the bullish side, the price has moved above its 200-day moving average (MA) and validated it as support afterward. Also, the RSI has bounced at the 50 line and has not generated any bearish divergence. However, the price is considerably above the 200-day MA, so even if it’s bullish, it could return to validate the MA once more before moving upwards. On the bearish side, the two candlesticks with the highest volume have been on April 30 and May 10, the first one a bearish doji while the second a bearish engulfing candlestick. Also, the price has finally made its first lower high, a possible sign that the trend is nearing its end. The price has moved above two support areas, found at $8,450 and $9,550, respectively. However, it initially broke down below the $9,550 one before moving above it once again, so it is possible that the price will not react to the area from here on out. The closest resistance area is found at $10,400, an area which the price has not reached since Feb. 14.

Short-Term Movement

Well-known trader @JoshRager outlined a Bitcoin price chart that shows the price trading near an important support level, inside which it has created a long lower wick.

Besides this support area, the price also seems to be trading inside a short-term ascending channel, currently being slightly above its support line. Similarly, technical indicators are undecided. The price has bounced above its 200-day MA and is trading above it. However, the highest volume has been on bearish candlesticks. In addition, the RSI is decreasing, currently being at 50, and has not generated any bullish divergence. The movement within the next few hours will likely determine the direction of the trend. The price is trading at a confluence of support levels:

• The $9,500 area, which along with a descending resistance line (dashed) possibly creates a descending triangle.
• The 200-hour MA
• The ascending support line

If the price breaks down, it could initiate a rapid drop towards $8,550. If, however, it breaks out above the dashed resistance line, it could move towards the resistance line of the channel and aforementioned resistance at $10,100.

To conclude, the Bitcoin price is trading inside a confluence of support levels but is following a descending resistance line. Whether the price breaks down from this area or breaks out above the resistance line will trigger a rapid movement in one or the other direction.