Bitcoin at Crossroads: Breakout or Breakdown?

For more than five weeks Bitcoin has been consolidating below that price level, establishing a high for the range at $88,772. Potential trend support is represented by a rising long-term trendline and the 50-week moving average (orange). Notice that the 50-week line was successfully tested as support recently, and that the trendline was touched twice, including this week. There is also a declining trendline defining possible dynamic resistance for the current correction, which is shown on the following daily chart. 

Measured Move Points to a Bottom

Besides support being seen during the recent swing low of $76,600, which was near the uptrend line and 50-week moving average, the bearish correction was a little above average on a percentage basis. It was the second largest bearish correction since the November 2022 bottom. At the March 11 low the price of Bitcoin had declined by $32,756 or 29.95% when measured from the $109,356 trend high (second top). That was the second largest percentage decline since the bearish correction that began from the March 2024 peak. Following that peak the price of Bitcoin dropped by as much as 32.82%. 

50-Week Moving Average Support is Key

The weekly low of $81,188 is the near-term area to watch for signs of support. A drop below that weekly low would follow a decline below the trendline. Nonetheless, the 50-week line has greater potential significance than the trend line. Currently, the 50-week moving average is at $76,662, just slightly above the recent swing low. As long as support holds above the 50-week line, the larger bull trend remains intact, as it has represented support for the trend since the 50-week line was reclaimed in March 2023.

Key Upside Pivot at $88,032

A closer look at recent price action on the daily chart shows dynamic resistance for the current decline represented by the 50-day moving average and a downtrend line. The two lines have converged and identify a similar price area near the 50-day line, currently at $88,032. When a moving average line and trendline identify a similar price, that price area can take on great significance. For Bitcoin that would be either as solid resistance or a key breakout pivot. 

Rally Above $89,164 Triggers Bullish Reversal

Given that the price resistance area is close to the consolidation high of $88,772 and the double top neckline at $89,164, it is important to monitor the entire price range from $88,075 to $89,164. A breakout above $89,164 will trigger a bullish reversal of the corrective decline as that high is a lower swing high that makes up the price structure of the downtrend. If there is a sustained recovery above that higher, it could be the beginning of an advance that eventually challenges the double top highs at $108,364 and $109.356 or leads to an eventual new record high.

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