Over the past week investors’ short-term sentiments about Bitcoin’s prospects appear to have improved. While last week’s market update made the case for why top investors and analysts are overwhelmingly bullish on Bitcoin’s predicted long-term price action, the fall from $13,800 to $9,100 did shake retail investors confidence for the short term.
Prior resistance levels that were obliterated throughout Bitcoin’s ascension from $4,000 to $13,800 proved to be weak support and many investors expected Bitcoin to drop to $8,500–$7,500 before reversing course.
Investors will have noticed that Bitcoin formed a double bottom around $9,100 and some believe that the expectation that Bitcoin will drop to $7,500–$8,500 will be a non-event as larger hands will front run a trend reversal from $9,000.
Since July 28, Bitcoin pulled off a low-volume upside move and the 19.6% gain brings the digital asset back to $10,800. $10,800 is a significant price point as it aligns with the 38.3% Fibonacci retracement level and is a few hundred dollars away from the $11,200 resistance.
Even more important from a psychological and technical point of view, a sustained move above the $11,200 resistance places Bitcion back into the rising wedge formation that carried Bitcoin from $4,000 to its 2019 all-time high.
The majority of crypto-media analysts have focused on the 21-EMA being a good indicator for gauging the strength of bullish and bearish momentum. Keeping this in mind, it’s worth noting that the most recent surge brought Bitcoin above this point.
One should also note that the majority of this week’s action occurred on low volume and more intuitive traders like Alessio Rastani advised caution as Bitcoin could ascend to $11,200–$11,500, quickly retract, and prove to be a bear trap.