Bitcoin Struggles to Pass Key Price Resistance Over $4K


    • Bitcoin could rise to recent highs near $4,200 in the short-term if prices validate the bullish outside reversal or “engulfing” candle created in the three days to March 16 with a convincing break above $4,040 (high of the engulfing candle).
    • Any spike to $4,200, however, would likely be short-lived as long as the 21-week simple moving average (currently located at $4,073) is sloping downwards.
    • A break below $3,927 (triangle low on the 4-hour chart) could yield a pullback to support lined up at $3,850.

    Bitcoin’s (BTC) bulls need to break key resistance at $4,040 to force a continued rally, the three-day chart indicates.

    The leading cryptocurrency by market value is trapped in the range of 3,920-$4,020 for the fourth consecutive day, having created a bullish outside-reversal or “engulfing” candle in the three days to March 16.

    A bullish engulfing candle occurs when the period begins with pessimism but ends on an optimistic note, engulfing the preceding period’s price action. While it is widely considered a bullish signal, traders usually wait for confirmation in the form of strong follow through, preferably a convincing move above the high of the engulfing candle.

    Put simply, a break above $4,040 – the high of the candle – is needed to validate the indicator. That would further reinforce the short-term bullish outlook put forward by the long-tailed doji candle created on Feb. 27 and allow a re-test of the recent highs near $4,200.

    As of writing, BTC is changing hands at $3,986 on Bitstamp, representing a 0.3 percent gain on a 24-hour basis.

    3-day chart

    The small doji candle created in the last three trading days has taken the shine off the preceding bullish outside reversal candle.

    A convincing move above $4,040 (candle’s high) will likely invite strong buying pressure and yield a rally to the inverse head-and-shoulders neckline resistance, currently at $4,230.

    That possibility looks likely, as the 5- and 10-candle moving averages (MAs) are biased bullish and BTC’s price is still holding above the ascending trendline.

    However, any gains above the 21-week simple moving average (SMA) at $4,073 could be short-lived, as that average is still trending south, as discussed earlier this week.

    4-hour chart

    On the 4-hour chart, BTC is struggling to force a descending triangle breakout, which, if confirmed, would boost the prospects of prices finding acceptance above the crucial resistance at $4,040.

    A break below the triangle low of $3,927, however, could yield a deeper pullback to $3,850. That said, a bearish reversal would be confirmed only if the support at $3,658 (Feb. 27 low) is breached.

    Bitcoin image via Shutterstock; charts by Trading View

    Source link

    Stay in the Loop

    Get the daily email from CryptoNews that makes reading the news actually enjoyable. Join our mailing list to stay in the loop to stay informed, for free.

    Latest stories

    - Advertisement - spot_img

    You might also like...