Bitcoin Hovers Above $10.1K As Momentum Stalls Near Key Indicator

Bitcoin Hovers Above $10.1K As Momentum Stalls Near Key Indicator

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  • Bitcoin’s interaction with the 100-period moving average on the daily and weekly charts have provided strong regions of support in the past and may do so again.
  • Exhaustion caused by low levels of total daily volume and market activity raises doubts about the direction for the mid-term.
  • Should the bulls lose the on-going stalemate in buying and selling pressure, bitcoin risks falling to weekly supports located near $7,560 in the coming weeks.

Bitcoin’s (BTC) price action continues to stall as the fight between buyers and sellers falls quiet near key average line.

The world’s largest cryptocurrency by market value is experiencing stagnant market activity for the seventh straight day with the widely-followed 100-period moving average (MA) restricting the downside.

As of writing, BTC is changing hands at $10,140 on Bitstamp, representing little change on the day, having tested the 100-day MA at $10,047 earlier today.

Exhaustion continues to play a part seen by low levels of total daily volume between Aug. 22 and Aug. 27, demonstrating minimal liquidity overall.

The last bastion of defense for the bulls in the mid-term rests along the 100-period moving average (MA), as seen in the chart below.

Daily chart

Bitcoin Hovers

Bitcoin Hovers

Previously, BTC’s interactions with the 100-period MA has reacted bullishly during an upward trending market (marked by a series of higher highs and higher lows), providing a strong region for a price bounce. That may yet prove fruitful should prices move above Aug. 26’s close near $10,360.

While BTC remains officially bullish above the 100-period MA (located at $10,047), a firm close below that price level could revitalize bear market aspirations.

Should buyers lose the on-going struggle for dominance in the coming month, then that would expose weekly supports located near a region with historical significance and a confluence of the 100-weekly MA.

Weekly chart

Bitcoin Hovers

Bitcoin Hovers

The weekly chart demonstrates how the 100-period MA reacts with BTC’s price by acting as a region of support during a strong uptrend.

For instance, on Jan. 11, 2016, BTC’s price fell by 20 percent, pulling back to the 100-period MA before it took 28 days to recover and break to new highs.

As stated, a loss by the bulls could expose the confluence of supports near June 10 lows and the 100-period MA at around $7,560.

Momentum would appear to be waning as the weekly awesome oscillator (AO), a trend-following indicator, begins to tick down toward the neutral line, backing the bearish outlook heading into next month.

However, a daily push and firm UTC close above $10,350 would question the bears to reconsider the short-term play and add credence to the theory of the 100-period MA acting as strong support during a bullish uptrend.

Disclosure: This author holds no cryptocurrency at the time of writing.

BTC image via Shutterstock; charts via Trading View