Is Bitcoin’s rally the start of something good? These indicators might shed some light on the matter.
Does the rally in the equities and crypto markets indicate that the risk-on sentiment is back? Let’s analyze five asset classes to review their trends and determine where they might go in the next few days.Bitcoin rebounded off the strong support at $18,626 on Sept. 7 and broke back above the breakdown level of $19,520 on Sept. 9. This may have triggered short-covering by the aggressive bears, which propelled the price above the 20-day exponential moving average .
If the price turns down from the current level or the overhead resistance at $21,900 but does not break below $20,576, it will suggest that the sentiment has changed from selling on rallies to buying on dips. That could increase the likelihood of a break above $21,900. Conversely, if the price rebounds off the moving averages with strength, it will indicate that the sentiment remains bullish and traders are viewing the dips as a buying opportunity. If bulls push the price above $110.78, the rally could extend to $113.95.The 20-EMA has turned down on the 4-hour chart and the RSI is in the negative territory, indicating that bears have the upper hand in the near term. The index could drop to the immediate support at $108.
The index could thereafter attempt a rally to $4,200. This level may act as a minor hurdle but if bulls overcome it, the recovery could reach the critical overhead resistance at $4,325. Conversely, if the price turns up and breaks above the moving averages, it will suggest that the bears may be losing their grip. That could push the price to the downtrend line. A break and close above this resistance could indicate that the downtrend may be over. That could start a rally to $1,825.The 4-hour chart shows bears are aggressively defending the overhead resistance at $1,737.40. If the price slips below the moving averages, the decline could extend to $1,700.
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