The Case $7.5K Could Become Bitcoin’s New Price Support

The Case $7.5K Could Become Bitcoin’s New Price Support

Amidst a decline within the value of bitcoin, the world’s most beneficial cryptocurrency may discover assist at $7,500 – that's if it fol

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Amidst a decline within the value of bitcoin, the world’s most beneficial cryptocurrency may discover assist at $7,500 – that’s if it follows previous patterns on the charts.

Bitcoin has confronted promoting strain over the previous couple of days, regardless of an impending golden crossover on the three-day chart – a bullish crossover of the 50- and 200-candle shifting averages, as mentioned final week. As of writing, the 50-candle shifting common (MA) is on an upward trajectory and appears set to cross above the 200-candle MA within the subsequent few days.

It is value noting, nonetheless, related golden crossover on the three-day chart was noticed in early February 2016, when a bitcoin bull market was then in its nascent phases.

More importantly, BTC was closely provided within the run-up to the affirmation of the golden crossover. Prices dropped to the 200-candle MA assist days earlier than the bull cross occurred and that degree was by no means put to check once more, as seen within the chart under.

Three-day chart (2015-16)

As seen above, BTC took a beating in six weeks main as much as the golden crossover confirmed on Feb. Three, 2016. Prices topped out at $467 seen in mid-December 2015 and virtually examined the 200-candle MA assist line of $348 in three days to January 19.

Over the following couple of months, BTC largely traded within the vary of $360 to $450 earlier than breaking increased. Essentially, the 200-candle MA served as a base forward of the golden crossover and the extent was by no means examined once more all through the rally from $450 to $20,000.

Also, it’s value noting that BTC rallied greater than 140 % from the August lows close to $200, earlier than topping out above $460 in mid-December.

The value motion seen over the previous couple of months appears eerily just like the one mentioned above.

Three-day chart (2019)

Placed in current context, BTC rose to a 17-month excessive of $13,880 final month. At that degree, the cryptocurrency was up almost 250 % from lows close to $four,000 noticed on the finish of March.

As of now, the cryptocurrency is altering palms at $9,600, representing a 30 % drop from current highs. Essentially, the cryptocurrency is shedding floor within the run-up to the golden crossover the best way it did earlier than the bull cross of February 2016.

If historical past is a information, then the continuing pullback could possibly be prolonged additional to the 200-candle MA, at present flatlined $7,448. Also, costs might bounce again strongly from that degree and resume the bull market.

Will historical past repeat itself?

History is thought to repeat itself in monetary markets and the bitcoin market is not any exception.

The prime cryptocurrency now seem to have bottomed out in December 2018 – i.e. a 12 months and a half forward of the mining reward halving due in May 2020 (reminding the crypto group of the vendor exhaustion forward of the reward halving and that passed off in August 2016).

Over the final 5 months, various technical indicators have produced patterns just like these seen earlier than the onset of the bull market in late 2015.

For occasion, the 50- and 100-week shifting averages produced a bearish crossover in February – two months earlier than BTC broke right into a bull market and two months after the cryptocurrency bottomed out close to $Three,100. An identical bear cross was noticed months earlier than BTC’s bullish breakout of October 2015.

All-in-all, there’s a sturdy case to imagine that BTC would drop to the 200-candle MA, at present at $7,448, earlier than the affirmation of the golden crossover on the Three-day chart after which rise again sharply.

Disclosure: The creator holds no cryptocurrency property on the time of writing.

Chart by way of Shutterstock; charts by Trading View

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