Did the U.S. Stock Market Just Save Bitcoin? Not Out of the Woods Yet

The $BTC price dipped under the bull market trendline and hit horizontal support below on Monday. A further fall looked likely, however, the U.S. stock market rallied almost to a new all-time high, perhaps supplying the upside sentiment that enabled Bitcoin to bounce back. It’s not out of the woods yet though.

U.S. stock market rally saves the day?

Source: TradingView

The $BTC price came down to exactly retest the $62,250 horizontal support line. From there a nice bounce occurred (probably helped by a buoyant stock market) that took the price back above the bull market support line and up as far as the 200 SMA from where the price has been rejected so far.

If the $BTC price is able to get above the 200 simple moving average, horizontal resistance plus the top of the descending channel are likely to prove tough barriers to further progress.

Yet another lower high could be the result of this move up, and the shorter term Stochastic RSI indicators are signalling a more bearish than bullish price momentum.

RSI signal sends warning of further downside

Source: TradingView

The daily chart shows that the $BTC price also climbed back above the 50-day SMA, possibly staving off a precipitous fall, at least for the time being. If the bulls can also push the price back up out of the channel, this would be a really positive step towards negating this recent downtrend.

Nevertheless, the bottom of the chart is sending a chilling warning as to what could happen next. The RSI indicator line has fallen out of the ascending wedge formation, which has been active since early June. If there is a retest and confirmation of the bottom of the wedge, or if the indicator line just continues on down, this could signal a dangerous time ahead for the $BTC price.

Weekly Stochastic RSI signalling next bearish move?

Source: TradingView

We are only two days into the new week and already the $BTC price has gone from the brink of a breakdown to relative safety. This to and fro between the bulls and the bears is likely to continue throughout the rest of the week, although it will only be at the end of trading on Sunday night that it will be known if the bulls have survived another week, or if the bears will be exerting even more control. 

As things stand, the $BTC price looks as though it might confirm the 200-week SMA as resistance, given that last week’s candle closed just below. Plenty of time for the bulls to negate this though as the week goes on. If the 200-week SMA does become resistance, look for the bull market trendline to follow suit, possibly forcing the price down to the bottom of the channel.

Arguably the most important indicator here is the weekly Stochastic RSI. The indicator lines are still in a bearish cross-down posture. If this is the case at the end of this week it would probably be the last completed tickbox for the next collapse to the downside.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.