Bitcoin price jumps 20% – testing major support and resistance levels

Bitcoin price jumps 20% - testing important support and resistance levels

Bitcoin is experiencing a rapid recovery. Its full price swing range has reached 20% in 48 hours. It has touched the 20-week exponential moving average. What could this mean and what is in store for the cryptocurrency market in the coming days?

Powerful movement

14.5% – such an upward candle was formed by Bitcoin on its chart on the last day of February. Thus, it avoided the fourth red month in a row. As we can see, Bitcoin successfully bounced off the yellow line that marks the long-term uptrend and with a very strong move broke through the resistance located in the zone between $40,000 and $42,000. In doing so, it also beat the 55-week EMA (exponential moving average) marked in red and is testing the 20-week EMA marked in green. Both are very important and when observed in combination can give many clues. The neighborhood of the former, broken downward and not recovered for a long time, historically suggested a bear market. The latter, after an upward breakout, usually provided support for a long-term upward cycle. The first day of March was a day when the Bitcoin price moved in a narrow channel defined by both of these lines. What may await Bitcoin in the near term is most likely a gentle unwinding of the dynamic rise. Testing the 55-week EMA while simultaneously testing the $40,000-$42,000 area has the power to form a potential inverted head-and-shoulders formation. As for now, it is just a hypothesis, but its possible breakout can lead the BTC price even to the area of $55,000. Moreover, any move above $46,000 is a chance to form another higher high, which is also a signal suggesting further increases.

Bitcoin’s dominance at a very important point

Looking at the BTC domination chart we can see that the leading cryptocurrency has reached a key resistance, which is additionally the edge of a descending triangle formed for almost a year. An upward breakout of such a formation is a less frequent variant. If it does, we can expect altcoins to continue to suffer relative to Bitcoin.

However, it is worth noting the Bollinger Bands, which suggest that Bitcoin’s dominance is increasing too quickly. This could mean that altcoins’ time is coming again. In that case, a return to the 40% dominance line is highly likely. Otherwise, Bitcoin should move after gaining close to the 48% dominance level. 

Altcoin market capitalization

Although bitcoin is rising, altcoins in relation to it are still not doing well. However, there are signs that this may be about to change. Watching the capitalization of altcoins (along with Ethereum), we see that this one reacts to levels set by Fibonacci retracements. In recent days, there was a bounce from around 0.786 Fibo and a quick hike to the upper line of the designated channel. This line again may constitute strong resistance. Its possible overcoming is the road to the level of 0.5 Fibo, where we should observe temporary selling pressure.

In turn, the market capitalization of altcoins excluding Ethereum presents something very interesting. Here it was difficult to see a reaction to the Fibonacci levels, there are on the other hand very clear bullish divergences. These are confirmed on both the MACD and the RSI. In this situation, it can be assumed that smaller coins will soon make their presence known.

Disclaimer: Blockbulletin does not take accountability of investments based on the information of the website. We highly advice readers to make extensive research prior to any invest

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