Bitcoin price has shown excellent resilience today as it is again back up to testing resistance at the $40000 level. BTC price has shredded gains and immediately regained the same all in just 24 hours. Amidst this volatility, it is crucial to know whether this uptrend will further validate a bull rally or not.
After forming a low at $36,400 level, BTC started rising and broke key resistance at $37K and $38K levels. The rally further surged to a high of $40,266 testing the crucial $40K resistance level. At the time of writing, BTC has retraced back to $39,597 failing to maintain a level above $40K.
For the day ahead, BTC should aim at clearing the resistance levels at $40K and $40,500 and cementing them to make any move forward. If the token manages to achieve this a rally towards $42,000 will be guaranteed.
However, in case of a downtrend, the immediate support is at the $38,800 level and the main support is at $37,500.
The Relative Strength Index (RSI) continues to trade in the overbought zone. this indicates that buyers are active and that upward price motion is intact, but overbought conditions may lead to a drop as bears fight to pull the price down.
The 200 Day SMA is a crucial barrier
Although Bitcoin is trying to achieve a break above the $40000 level, it wouldn’t be enough to declare victory and start a new bull rally.
Right now the major barrier capping BTCs uptrend is the 200 Day Simple Moving Average. Hence a break above this line is necessary to facilitate Bitcoin to surge towards a high of $48K.
Popular Analyst Lark Davis has weighed in on this. In his Youtube Video, he says He’s keeping a watch on the 200-day simple moving average (SMA) to see if Bitcoin bulls can reclaim market momentum.
“There’s one simple line we need to keep our eye on. That is the 200-day simple moving average. That’s the bull/bear line for me…That’s currently around $44,700. That’s the line that the bulls need to take control of. Until we cross over that line, we are still technically in a bearish trend.”
Hence a break above $44,700 will act as a validator to confirm a bullish trend.