Bitcoin (BTC) defended a key long-term price floor as it recovered from the three-week lows near $6,200 hit on Friday.
The leading cryptocurrency looked set to pierce the 21-day exponential moving average (EMA), which has been serving as a strong support since June, having witnessed a strong bearish move last Thursday.
However, yesterday’s tether-led rally in BTC ensured that the crucial EMA support remains intact. At press time, BTC is changing hands at $6,730 on Bitfinex, having clocked a high of $7,788 yesterday. Meanwhile, the 21-month EMA is located at $6,160.
The argument that the bear market has likely run its course remains valid as long as prices are trading above the 21-month EMA.
While the solid bounce from the area around the crucial EMA support is encouraging, a bullish reversal is still not confirmed, as discussed yesterday.
As seen in the chart above, the bears are struggling to penetrate the 21-month EMA for the fifth month running.
It is worth noting that each time the bears fail to keep prices below 21-day EMA, they end up pushing higher the probability of a major bullish reversal.
BTC’s repeated failure to keep gains above the 10-week EMA seen in the last four weeks has established the technical indicator as the key level to beat for the bulls.
As of writing, BTC is trading above the 10-week EMA of $6,671, however, only a weekly close (Sunday’s close as per UTC) above that level would confirm a continuation of the rally from the low of $6,100 reached in mid-September.
Investors need not wait for a confirmation of the breakout on a weekly closing basis if the cryptocurrency finds acceptance above $7,000 in the next day or two.
- The sellers continue to have a tough time, beating the 21-day EMA support.
- A sustained break (weekly or monthly close) below the 21-day EMA would signal a revival of the sell-off from the record high of $20,000 hit last December.
- A bullish reversal would be confirmed after prices have cleared September highs above $7,400.
Disclosure: The author holds no cryptocurrency assets at the time of writing.