Bitcoin, the leading cryptocurrency by market capitalization, has shown a strong bullish momentum in the past few hours. The price broke above the crucial resistance level of $36,000 and reached a new weekly high of $36,525. This move indicates that the buyers are in control and that there is a possibility of more gains in the near term.
In this article, we will examine the technical factors behind the recent rally and the possible scenarios for the next moves. We will also provide some tips on how to trade Bitcoin in this volatile market.
The Breakout Above $36,000
Each time the price approached $36,000, it faced a strong selling pressure and retreated lower. This created a range-bound scenario between $35,000 and $36,000, with neither buyers nor sellers gaining an edge.
However, on Thursday, November 9, 2023, the situation changed. The price formed a solid support base above $35,500 and started to climb higher. It gained momentum and broke above the $36,000 barrier with a strong candle.
This breakout signaled a shift in the market sentiment from bearish to bullish. It also triggered a wave of buying pressure from traders who were waiting for a confirmation of the trend reversal. As a result, the price spiked towards $36,500 and formed a new weekly high.
The Technical Factors Behind the Rally
The rally above $36,000 was supported by several technical factors that indicated a positive outlook for Bitcoin. Some of these factors are:
– The price is trading above the 100-hourly Simple Moving Average (SMA), which is a key indicator of the trend direction. The SMA is currently at $35,900 and is rising along with the price.
– There is a key bullish trend line forming with support near $35,800 on the hourly chart of the BTC/USD pair. The trend line is acting as a dynamic support and is coinciding with the 50% Fibonacci retracement level of the upward move from the $35,100 swing low to the $36,525 high.
– The Relative Strength Index (RSI) is well above the 50 level and is showing no signs of divergence. This means that the buyers are still strong and that there is room for more upside.
– The Moving Average Convergence Divergence (MACD) is in the positive zone and is increasing its bullish slope. This indicates that the momentum is in favor of the bulls and that there is a possibility of a further increase.
The Possible Scenarios for the Next Moves
Based on the current technical setup, there are two main scenarios that could play out for Bitcoin in the next hours or days. These are:
– The bullish scenario: In this scenario, the price continues to follow the bullish trend line and breaks above the $36,500 high. This would open the doors for more gains towards the next major resistance levels at $37,000 and $37,500. If the bulls manage to clear these levels, then there is a chance of a rally towards $38,000 or even $40,000 in the medium term.
– The bearish scenario: In this scenario, the price fails to sustain above $36,000 and breaks below the bullish trend line. This would indicate a false breakout and a possible reversal of the trend. In this case, the price could drop towards the 100-hourly SMA at $35,900 or even lower towards $35,500 or $35,000. If these levels are breached, then there is a risk of a larger decline towards $34,000 or $33,000 in the short term.
How to Trade Bitcoin in This Volatile Market
Trading Bitcoin in this volatile market can be challenging but also rewarding if done correctly. Here are some tips on how to trade Bitcoin in this situation:
– Use proper risk management: Always use stop-loss orders and limit orders to protect your capital and lock your profits. Do not risk more than you can afford to lose and do not over-leverage your positions.
– Follow the trend: The trend is your friend until it bends. Do not go against the trend and do not try to catch falling knives or chase rising rockets. Trade with the direction of the market and look for confirmation signals before entering or exiting a trade.
– Be flexible and adaptable: The market is constantly changing and so should your strategy. Do not be stubborn or emotional and do not fall in love with your positions. Be ready to adjust your plans according to the market conditions and the price action.
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