Bitcoin recently made a strong rally, enough to break past the neckline of its double bottom at $3,600 to $3,700. This confirms that an uptrend is underway, but only if buyers can be able to keep price above the area of interest.
Applying the Fibonacci retracement tool on the latest swing low and high shows that the 38.2% to 50% levels span the former resistance that might now hold as support. If so, bitcoin could recover to the swing high around $4,035 and beyond. This area of interest is also in line with the 100 SMA dynamic inflection point.
On the subject of moving averages, the 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside. In other words, the uptrend is more likely to gain traction than to reverse. The gap between the moving averages is also widening to reflect increased bullish momentum, but a larger pullback could still test the 200 SMA dynamic support just below the 61.8% Fib at $3,500.
RSI is heading lower to signal that sellers have control of the game and could keep pushing for more declines. However, this oscillator is also nearing the oversold region to signal that sellers might be exhausted soon. Similarly stochastic is approaching the oversold territory on its move south, and turning higher could signal a return in bullish momentum.
Bitcoin made quite the recovery and market watchers are pinning it on a number of factors. First is the Coinbase offering of crypto to crypto trading that could boost volumes in the retail sector. Next is the report that Mark Dow, the former IMF economist that opened a major short play on bitcoin after it hit its all-time highs, closed his remaining position also led many to think that he may already be seeing a market bottom.