Wednesday's Market Minute: Bitcoin Bulls Face Inflection Point

Bitcoin has been undergoing one of its trademark breakneck rallies, with /BTC futures surging 26% from off the lows on Wednesday, September 29 to yesterday’s close. Price leaped from trading below most of its major moving averages to crossing and closing above them, with this rapid rebound also causing the 21-day and 63-day Exponential Moving Averages to switch back to trending upward from downward.

These developments typically would be viewed as bullish, as would others like the Parabolic SAR crossover, MACD crossover, and yesterday’s close above the upper Bollinger Band. However, the cryptocurrency future must first break above its previous highs near 53,170, or it could spell the beginning of range-bound trading between double-top resistance there and the recent price floor near 41,000.

This is also happening right as /BTC is near its yearly linear regression line around 52,290. This indicator creates a “line of best fit” and suggests price is actually about at fair value. When trading products with as much volatility as bitcoin, it may be worth examining shorter moving averages due to their greater sensitivity to price changes, such as the 9-day EMA now near 47,900 to the downside.

Most other major moving averages are clustered relatively closely together between 44,480 to 46,380, so this will be another key area to watch. As for the upside, look for potential resistance around 60,000 where prices topped out last time.

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