Bitcoin is showing a lot of positive signs above the $7,400 and $7,200 support levels.
A clear break above the $7,650 resistance could open the doors for a fresh rally.
There is a short term contracting triangle forming with resistance near $7,625 on the 4-hours chart of the BTC/USD pair (data feed from Kraken).
The pair could correct a few points, but the bulls are likely to protect the $7,400 support
Bitcoin is Back in Uptrend
This past week, bitcoin started a strong rise from the $7,028 swing low against the US Dollar. BTC price gained bullish momentum and broke the key $7,200 resistance level.
It opened the doors for a decent increase above the $7,400 resistance and the 100 simple moving average (4-hours). The price even climbed above the $7,500 hurdle and traded to a new weekly high at $7,788.
Recently, there was a downside correction below the $7,600 level. Bitcoin traded below the 23.6% Fib retracement level of the recent rise from the $7,028 swing low to $7,788 high.
On the downside, the $7,400 support area is acting as a strong buy zone (the previous breakout zone). The 50% Fib retracement level of the recent rise from the $7,028 swing low to $7,788 high is also near $7,408 and acting as a decent support base.
It seems like the price is currently consolidating above the $7,400 support. More importantly, there is a short term contracting triangle forming with resistance near $7,625 on the 4-hours chart of the BTC/USD pair.
Bitcoin Price
If there is an upside break above the $7,625 and $7,650 resistance levels, the price is likely to resume its uptrend. An initial resistance is near the $7,800 level, above which it could test the key $8,000 resistance area.
Downside Correction
If bitcoin fails to continue above the $7,650 resistance level, it could extend its correction. The first major support is near the $7,400 level, where the bulls are likely to emerge.
Any further losses may perhaps lead the price towards the next key support at $7,200 or a connecting bullish trend line on the same chart.
Technical indicators
4 hours MACD – The MACD for BTC/USD is slowly losing pace in the bullish zone.
4 hours RSI (Relative Strength Index) – The RSI for BTC/USD is currently correcting lower from the 65 level.
Major Support Level – $7,400
Major Resistance Level – $7,800
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