Bitcoin registered three consecutive winning days this week to overcome its 20- and 50-day moving averages (MA) and enter the Ichimoku cloud.
But the bulls seem to be running out of fuel according to the Stochastics which are set for a bearish cross above the 80 overbought mark. The RSI confirms this view, as the indicator looks to be losing steam slightly below its own 70 overbought level.
A reversal to the downside could see a retest of the bottom of the Ichimoku cloud around 3,720. Exiting the cloud, bearish action could pause next within the 3,480-3,300 support area, while a more aggressive sell-off is expected to test the 15-month low of 3,111.
On the upside, a decisive close above the 4,000-4,400 region is needed for the crypto to gain stronger interest from investors. Moreover, a run above 4,800, where the 50% Fibonacci of the downleg from 6,511 to 3,111 meets the upper bound of the cloud, would be an even more attractive target for the bulls as a break above this level is needed to shift the current three-month long neutral phase to a bullish one.
by Christina Parthenidou, XM Investment Research Desk
Christina joined the XM investment research department in May 2017.
She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics. Previously, she earned a bachelor of science in Economics from the University of Cyprus. Apart from foreign exchange markets, her research interests include the impact of International trade on labour markets and product development.