A crypto market analyst has shared the key levels to watch out for as Bitcoin (BTC) confirms a major level of support for the first time in months, opening the door for a continuation of its April recovery rally.
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Bitcoin EMA Reclaim Signals More Upside Potential
After ending the week above a crucial level, Bitcoin rose 2.2% to move above the $80,000 resistance for the first time since January. The flagship crypto has been trading between $74,000 and $79,000 in recent weeks, failing to regain the upper end of the range despite multiple attempts.
On Sunday, BTC closed above the $78,000 mark for the second week in a row, cementing the 21-week Exponential Moving Average (EMA) as support. Previously, analyst Rekt Capital highlighted the 21-week and 50-week EMAs as two key levels for the cryptocurrency’s ongoing rally, explaining that these moving averages tend to act as support during bull markets and strong resistance during bear markets.
In a Monday analysis, the market observer said noted that these levels “did not turn into perfect resistance” this time, despite losing as support after the pre-bearish crossover at the beginning of the year.
Nevertheless, their divergence created a “general supply area” rather than a “general demand area” configuration, which is typically seen during bull markets. Now: “BTC has Weekly Closed above the EMA, has a very volatile retest of it and Weekly Closed above it again.”
As a result, Bitcoin is positioned for an uptrend, the analyst confirmed. He added that price strength was confirmed after last week’s close, but will need continued stability in the absence of a follow-up move higher.
If the trend continues, the analyst suggested a wave deeper into the supply zone is likely, with the 50-week EMA, currently around $86,000-$87,000, being the ultimate stop to any upside wick.
“Overall, however, the price should reject anything within this supply range and not move higher,” he warned.
BTC on trend continuation or rally ceiling?
As Bitcoin attempts to reclaim the $80,000 level, Rekt Capital confirmed that the $82,500 region “does not play a defined role.” In particular, this crucial horizontal area has served as strong support and is the basis of a macrotriangle formation that was lost during the February price crash.
“The first time the price reached it, we produced a decent recovery to new All Time Highs. The next time the price reached the same level, we produced a much smaller rally, a sign that support there was already weakening. Now $82,500 has no defined role. But maybe we are defining it right now,” the analyst said.
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He explained that a rejection without breaking this resistance would make this the price ceiling, forcing a retest of BTC’s old All-Time Highs (ATH) area between $69,000 and $74,000 as we are only halfway through the bear market. Moreover, during this part of the cycle, Bitcoin has failed to regain a macro triangle once the price collapses.
Rekt Capital be To debunk the Four Year Cycle theorem and declare the end of the bear market, BTC would have to break back above the base of the macro triangle on the monthly time frame and above the macro downtrend, located above the $96,000 area.
Featured image from Unsplash.com, chart from TradingView.com