Difficulty Ribbons indicator is flashing an incredibly bullish sign for Bitcoin price
Bitcoin price action throughout the past 24-hours has been incredibly positive for bulls, as the crypto is now consolidating below its crucial resistance as buyers aim catalyzing further upside. In the near-term, it appears that where BTC trends next may depend almost entirely on its reaction to the selling pressure that exists between $ 11.000 and $ 11.200.
This price region has catalyzed multiple vigorous plunges in the past and could lead to a deeper drawdown if another rejection is posted at this level. That being said, one fundamental indicator is flashing an incredibly bullish sign for Bitcoin. The cryptocurrency’s difficulty ribbons just entered the “buy zone” for the first time since March. This indicates that the recent bout of consolidation may be nothing more than a precursor to an extension of its mid-term uptrend seen throughout Q2 and Q3 of 2020.
Bitcoin price is retreating lower
Yesterday, we saw a decent increase in Bitcoin price above $ 10.800 and discussed the importance of the $11,000 resistance against the US Dollar. BTC did fail to gain strength, and it remained well below the $ 11.000 resistance.
As a result, there was a bearish reaction, and the price declined below the $10,800 support level. There was a clear break below the 50% Fib retracement level of the upward move from the $ 10.600 swing low to $ 10.945 high.
The price is now trading below the $ 10.750, the 100 hourly simple moving average, and the 76.4% Fib retracement level of the upward move from the $ 10.600 swing low to $ 10.945 high. It seems like the $ 10.650 is currently acting as a support.
Bitcoin price declines below $ 10.800 | Source: TradingView
There is also a key bullish trend line forming with support near $ 10.650 on the hourly chart of the BTC/USD pair. If there is a downside break below the trend line support, the price could revisit the $ 10.550 support zone. On the upside, the price is likely to face sellers near the $10,800 level. The main hurdle for the bulls is near the $11,000. A successful close above the $11,000 resistance is a must for a sustained upward move in the near term.
If Bitcoin fails to recover above the $ 10.800 resistance, there is a risk of a downside break. The first key support is near $ 10.650. The main support zone is forming near the $ 10.550 and $ 10.500. A clear break below $ 10.500 is likely to start a sharp decline, and the price could even test the $ 10.000.
Bitcoin consolidates following sharp overnight upswing, while on-chain data shows BTC gearing up for push higher
At press time, Bitcoin is trading down 1% at its current price of $ 10.727. This is around the price at which it has been trading throughout the past few days and weeks. The latest upswing came about shortly after BTC posted its weekly candle close. The strength of this close provided a boost to bulls, showing that it may be positioned to see further upside in the days and weeks ahead.
For Bitcoin to push any higher in the near-term, it must surmount the relatively heavy selling pressure seen between $ 11.000 and $ 11.200. This is the region where the benchmark crypto faced a grueling rejection at just over a week ago, which led it to decline to as low as $ 10.200.
According to the historically accurate Difficulty Ribbons indicator, Bitcoin could be on the cusp of seeing the further upside. Analytics platform Glassnode spoke about the indicator, explaining that it uses a “standard deviation to quantify periods of high ribbon compression” to signal good buying opportunities.
The last time it entered the buy zone – as it just did earlier today – was in March when Bitcoin set yearly lows of $3,800, followed by a series of massive upside movements.
“Bitcoin Difficulty Ribbon Compression was trending up and broke out of the green buy zone for the first time since March. Historically, these have been periods characterized by a positive momentum indicating significant BTC price increases.”
How the market trends in the weeks ahead should provide investors with insights into the integrity of this buy signal.
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