Same as like that the Bitcoin is moving by breaking up the resistance and using the previous resistance as a support to reach the next resistance level.
This is very important point. But we will discuss this point later in this article.
Exponential Moving Averages A Firm Support:
If we see on the 2 day chart then we have received a bull cross between exponential moving average 10 and exponential moving average 20 on 11th of January.
I have used here exponential moving averages rather than simple moving averages because the exponential moving averages are more flexible than the simple moving averages therefore they work as better support as compare to the simple moving averages.
On below chart we can see that since we have received this bull cross the price action is using exponential moving average 10 as a support first the price action moved up from 3rd of January 2020 up to 19th of January and moved down at exponential moving average 10 and the EMA 10 has shown some flexibility and also moved little bit down and then pushed the price action up.
This is same as like we play the badminton when the shuttle comes over the head then we pull our arm with the flexibility over the head and smash the shuttle to the opponent’s area.
In the same manner the EMA works on the chart whenever the price action moves down and hit at EMA and puts some pressure on exponential moving average the EMA shows flexibility and moves down and push the price action up.
At this time the price line is putting pressure on EMA 10 and EMA 10 is moving down to push the price action upwards again.
200SMA A Good Support As A Stop Loss:
The 4 hour is playing is very important role in this bullish move of Bitcoin as in my previous article we have seen that on 4 hour chart the priceline of BTC formed a bullish crab pattern and from the potential reversal zone of this bullish crab pattern the price action took a bullish divergence and was likely to make another bull rally.
But after moving up to 8 ercent the price action dropped down again and found a new support at $9501 on this four hour chart and likely to form a temporary channel between $9501 and $9819.
There is another very important signal on this four hour is the support of 200 simple moving average in recent drop of 19th of February 2020 the leading cryptocurrency has hit twice on this 200 SMA but could not break down this 200 simple moving average support therefore this 200 simple moving average can be used as a stop loss.
200SMA A Good Support As A Stop Loss:
The 4 hour is playing is very important role in this bullish move of Bitcoin as in my previous article we have seen that on 4 hour chart the priceline of BTC formed a bullish crab pattern and from the potential reversal zone of this bullish crab pattern the price action took a bullish divergence and was likely to make another bull rally.
But after moving up to 8 ercent the price action dropped down again and found a new support at $9501 on this four hour chart and likely to form a temporary channel between $9501 and $9819.
There is another very important signal on this four hour is the support of 200 simple moving average in recent drop of 19th of February 2020 the leading cryptocurrency has hit twice on this 200 SMA but could not break down this 200 simple moving average support therefore this 200 simple moving average can be used as a stop loss.
Bullish Rally Synchronized With Indicators:
There is another very important signal being received on 4 hour chart and that is the bullish move of the price action is very much synchronized with relative strength index (RSI) stochastic and the momentum indicators. Whenever the RSI goes in oversold zone and stochastic gives bull cross and momentum turns bullish the price action starts a new bullish move, this can be seen on 18th of December 2019, 3rd of January and 24th of January 2020. Now this time the RSI visited the oversold zone on 17th of Feb 2020 and received a bull cross from stochastic and momentum also turned bullish and the price action was suppose to take the bullish divergence and start other rally but after up to 8% move the price action dropped down again.
This is very much similar to the move of 24th of January 2020 when the price action dropped and RSI visited the oversold zone and a bull cross from stochastic was received and momentum indicator also gave bullish signals but the price action moved little bit upwards and dropped down again then again we received a bull cross from stochastic and momentum indicator and bullish signal on 25th of January 2020 and priceline started a massive bullish rally.
This time after a small drop the stochastic has given bull cross again and momentum indicator is also turning bullish like happened on 25th of January 2020 so this is a very positive signal for a next bullish rally.
Now coming back to my previous article's example where we have seen that the price action is moving up same as like we move upstairs using steps if we see on the chart the price action first broke out the resistance level at $8314 dollars and retraced and used the previous resistance level as a support and using this support the price action moved to next resistance level at 9819 dollars and broke out this resistance level is well.
Now here we can see that while retesting the previous resistance as a support the price action is likely to break down this support and the retesting of this support is seems to be failed as we have candlesticks closed below this support level but this time the movement of Bitcoin is quite tricky as in my previous article I have said that while re-testing of previous support if we will receive a bull cross from stochastic and moving average convergence divergence (MACD) will be turned weak bearish from strong bearish then I am pretty sure that the price action will move up to reach next resistance level AT almost $11,000.
Now if we observe on the chart when the candlestick closed below the support level sudden after that on 12 hour chart MACD turned weak bearish from strong bearish and stochastic also gave bull cross and these bullish signals can be seen upto 23 hour chart, so if these signals are appeared up to 23 hour chart and there are more chances that these signals will be reflected up to 24 hour daily chart very soon.
Up to Day Chart The MACD And Stochastic Are Bearish:
Upto 23 Hour Char The Stochastic And MACD Are Turning Bullish:
So once we will see these bullish signals on daily chart then the BTC will hit up to $11000 that is next resistance level.