Bitcoin formed another bullish reversal pattern on Apr. 25, but this time the King of Crypto may be stuck in “no man’s land” in the short-term. Here’s why…
In our Apr. 18 post, we showed you that Bitcoin (BTC) formed a bullish reversal candle after undercutting support and rallying back above “psychological resistance” at the 40,000 level on Apr. 18.
That bullish reversal day triggered a new, short-term buy signal, and prompted us to buy BTC that day.
However, we also warned that BTC could still pullback after rallying into key resistance of its 50-day moving average around 42,100–!
BTC initially blasted through its 50-day MA on Apr. 21, but failed to hold the breakout for more than a few hours before selling pressure caused the price to slide lower.
The failed breakout attempt at the 50-day MA attracted further selling, which weighed heavily on Bitcoin and most altcoins for four more days.
Bearish price action began intensifying on Apr. 25, initially causing BTC to plunge below the low of its Apr. 18 reversal day. However, the bulls stepped in, reversed the bearish momentum, and pushed Bitcoin back above that pivotal 40,000 level again.
As such, BTC formed another bullish reversal day on Apr. 25; exactly one week after the formation of the previous one.
BTC Daily Chart
The Apr. 25 reversal day, confirmed by higher volume, technically shifted the short-term balance of power back to the bulls. Nevertheless, a lot of overhead supply has been created in the wake of the recent sell-off sparked by the bearish reversal at the 50-day MA.
Perhaps more importantly, Bitcoin continues moving in sync with the US stock market—and that’s not good considering the current technical state of US stocks.
It’s unlikely the BTC reversal bar would have formed on Apr. 25 if the NASDAQ would have failed to bounce that day.
Furthermore, the Apr. 25 bullish reversal day may be unable to follow through recent, heavy selling pressure in the NASDAQ remain in the coming days.
With BTC caught between a rock and hard place right now, we are currently in “SOH mode” (sitting on hands).
However, if Bitcoin price action continues improving, then we will seek new crypto swing trade entries in setups with low-risk entry points and positive risk-reward ratios.