Bitcoin Technical Outlook: BTC/USD Turns Bullish

Bitcoin, BTC/USD – Technical Outlook:

• Bitcoin’s short-term trend has turned bullish.
• The case for a broader base-building in cryptocurrencies remains intact.
• What’s next for BTC/USD and what are the key levels to watch?

BITCOIN SHORT-TERM TECHNICAL OUTLOOK – BULLISH

Bitcoin’s break above key resistance in recent days has changed the trend bias to bullish from range.

After months of sideways price action characterized by low realized volatility, the momentum in Bitcoin appears to have finally picked up. BTC/USD has broken above key converged resistance on the 89-day moving average (a significant barrier since mid-2022), coinciding with another ceiling at the mid-December high of 18370. The break above the combined ceiling has paved way for the 200-day moving average and importantly implies that the short-term trend has turned bullish,as the previous update highlighted.

BTC/USD Daily Chart

Chart Created Using TradingView

Importantly, the bullish break this month raises the odds further of a broader base building in cryptocurrencies –first highlighted mid-November as scenario 1.Interestingly, this month’s rise has meant that BTC/USD has retraced 100% of the November 2022 slide. When a market is able to retrace 100% of the last leg lower, it is often a sign of capitulation, suggesting that bears are exhausted for now.

BTC/USD Weekly Chart

Chart Created Using TradingView

Having said that, because of the damage since 2021, any recovery path could be bumpy. Most immediately, BTC/USD needs to tackle resistance at the November high of 21470. A minor retreat wouldn’t be surprising given the significance of the hurdle. Still, there is ample support that could restrict the downside, starting with the 200-day moving average initially (now at about 19550), followed by the mid-December high of 18370. A break below 16300-16900 would confirm that the short-term upward pressure had reversed.

Beyond the short term, BTC/USD needs to clear the August 2022 high of 25200, coinciding with the 200-week moving average for the medium-term downward pressure to fade.

— Written by Manish Jaradi, Strategist for DailyFX.com