A cryptocurrency analyst has shared key levels to watch as Bitcoin (BTC) confirms a key level as support for the first time in months, opening the door to a continuation of April’s recovery rally.
Bitcoin EMA Recovery Signals Greater Upside Potential
After closing the week above a key level, Bitcoin rose 2.2% to break above the $80,000 resistance for the first time since January. The flagship cryptocurrency has been trading between $74,000 and $79,000 for the past few weeks, but despite multiple attempts, it has failed to regain the upper end of the range.
On Sunday, BTC closed above the $78,000 level for the second straight week, confirming its 21-week exponential moving average (EMA) as support. Previously, the Rekt Capital analyst highlighted the 21-week and 50-week EMAs as two key levels for the cryptocurrency’s ongoing rally, explaining that these moving averages typically act as support during a bull market and as powerful resistance during a bear market.
In Monday’s analysis, a market observer excellent that this time around, these levels “haven’t turned into perfect resistance,” even though they lost them as support after moving before falling earlier in the year.
However, their divergence has created a “general supply area” rather than the “general demand area” configuration typically seen during a bull market. Now, “BTC closed above the EMA on a weekly basis, performed a highly volatile retest of it, and closed above the EMA again.”
As a result, Bitcoin is pointing upwards, the analyst confirmed, adding that he has confirmation of price strength after last week’s close, but will need further stability in the absence of further upward movement.
If the trend continues, the analyst suggested that a acute rally deeper into the supply zone is likely, with the 50-week EMA currently sitting around $86,000-87,000 as the final stop for any upside.
“Overall, however, everything in this supply area means that the price should decline and not rise,” he warned.
BTC continuing the trend or at the top of the rally?
As Bitcoin tries to reclaim the $80,000 level, Rekt Capital confirmed that the $82,500 region has “no defined role.” It is worth noting that this key horizontal area served as powerful support and forms the basis of the macro triangle formation that was lost during the February price crash.
“When the price first hit this level, there was a decent bounce towards new all-time highs. The next time the price hit this same level, we made a much smaller gain, which means the support there was already fading. Currently, $82,500 has no defined role. But perhaps we’re defining that as we speak,” the analyst stated.
He explained that a rejection without breaking this resistance would make it a price high, forcing a retest of BTC’s elderly all-time high (ATH) area between $69,000 and $74,000 as we are only halfway through the bear market. Furthermore, Bitcoin has not been able to regain the macro triangle during this part of the cycle when the price collapses.
The capital of Recht pointed that in order to invalidate the four-year cycle thesis and announce the end of the bear market, BTC would have to break above the base of the macrotriangle on a monthly basis and above the downward macrotrend located above the $96,000 area.
Featured image from Unsplash.com, chart from TradingView.com
