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Bitcoin Price Blasts Through Key $7.4K Resistance – Next Target $8.1K

bitcoin-price-blasts-through-key-$74k-resistance-–-next-target-$8.1k

Bitcoin has cleared a key resistance level at around $7,400 opening the door for the next test closer to $8K.

Since dropping below the descending channel on Nov. 25, Bitcoin (BTC) has reclaimed $7,000, cleared some hefty resistance at $7,400 and now made its way up to above $7,500 by press time.

Crypto market daily performance. Source: Coin360

The 111-day moving average (DMA) and the 128-DMA are currently in the process of converging to form a bear cross, an occurrence which last happened on Apr. 30 when the moving averages crossed at $5,150.

BTC USD daily chart. Source: TradingView

Investor sentiment remains muted as traders are unsure whether Bitcoin price has found a bottom yet but the technical setup is clearly improving on the shorter timeframe.

Despite this, the Crypto Fear and Greed Index shows sentiment still in the extreme fear zone. One would expect this figure to improve if the daily candle closes above the resistance at $7,350.

Fear & Greed Index. Source: alternative.me

Willy Woo’s Bitcoin Network Value to Transactions (NVT) Signal also provides some insight into Bitcoin’s current price action. The indicator attempts to identify market tops and bottoms by signaling overbought and oversold conditions. According to Woo, any NVT level above 145 is overbought and an NVT reading below 45 is oversold.

Bitcoin NVT Signal. Source: Woobull.com

Currently, the NVT indicator reading is 64.6. The chart also shows that during bull markets, the BTC price has remained above the 200-DMA. Given that price has a history of bouncing off the 200 daily and weekly moving average, the most recent drop to $6,500 may have been a good time to open a Bitcoin position.

The Bitcoin price is now below the 200-DMA ($9,403) and the chart shows price pulling closer to the realized price at $5,649. Readers will also notice that during periods of consolidation Bitcoin price rides along with the 200-week moving average, which is currently at $4,878.

BTC USD daily chart. Source: TradingView

As shown by the daily chart, Bitcoin’s drop below the descending channel brought the price to $6,570, a price last seen on May 13. Below $6,570 there is a volume gap until $5,666 since this point was a part of Bitcoin’s parabolic rally from $4,000 to $13,800.

The volume profile visible range (VPVR) shows buying interest in the $5,500 to $5,100 area. Notice that Woo’s Bitcoin NVT Signal currently shows a realized price of $5,649 and the 200-WMA is at $4,878, a point of interest on the VPVR.

For the doomers calling for a visit back to 2019 lows, the 161.80% Fibonacci extension at $4,000 would be a total retrace of the parabolic move that took Bitcoin price to $13,800 on June 26.

It seems unlikely that Bitcoin price will drop to these levels but a similar conclusion made last week proved many investors wrong and it’s always good to consider bullish and bearish scenarios. One would like to think that a drop to $5,500 will be avoided if bulls can keep the price above $7,300 and $6,700.

Bullish scenario

If Bitcoin can hold the $7,075 support and avoid dropping below the descending channel trendline at $6,712, investors may feel that the digital asset has bottomed and begin to open long positions in the current range.

From a momentum traders’ point of view, the price has completed the cycle of touching the upper trendline of the descending channel and also the bottom trendline so once further confirmation of a price bottom is provided, swing traders will probably consider entries within the current range.

Traders entering long positions without leverage are likely anticipating an 18% to 25% gain, assuming Bitcoin slowly works its way back up to the main trendline of the descending channel.

Some traders have also noted that if Bitcoin can gain above $7,300, this would complete the inverse head and shoulders pattern and possibly send the price to the middle support of the descending channel which aligns with the $7,800 resistance — a high volume node on the VPVR.

BTC USD daily chart. Source: TradingView

At the time of publishing, bulls are fighting to keep Bitcoin price above $7,400 and the daily relative strength index has bounced sharply from oversold territory. The moving average convergence divergence (MACD) line has also begun to curl up toward the signal line as selling pressure abates and traders will notice that a bull cross has already taken place on shorter timeframes.

BTC Daily MACD, RSI, Stoch chart. Source: TradingView

BTC USD daily chart. Source: TradingView

According to the volume profile visible range, Bitcoin could gain to $7,800 to $8,000 before encountering significant overhead resistance. This level also lines up with the moving average of the Bollinger Band indicator, which is currently at $8,100.

Currently, bulls have shown some strength and are pushing Bitcoin price closer to the $7,800 resistance. Traders will be looking for Bitcoin to close above the former support turned resistance at $7,400 and it’s possible that previous supports at $7,800, $8,200, $8,530, and $9,000 will also present themselves as resistance. Gains above $8,500 would place Bitcoin price above the 200-DMA.

The views and opinions expressed here are solely those of the author (@HorusHughes) and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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