Bitcoin is having a tough time scaling a key moving average hurdle that has kept the bulls in check for four weeks straight.
The obstacle that is proving so hard to beat is the 10-week exponential moving average (EMA), which stalled a rally attempt from around $6,100 in mid-September.
Since then, BTC has notably failed to produce a weekly close (Sunday’s close as per UTC) above the EMA, establishing it as a crucial level to beat for the bulls.
At press time, BTC is trading at $6,580 on Bitfinex, having clocked a weekly high of $6,730 on Monday. The 10-week EMA, meanwhile, is flatlined at $6,698.
The retreat in the last three days indicates that BTC has failed yet again to leap the EMA hurdle, weakening the odds of further gains toward $7,000.
As seen in the chart above, the 10-week EMA has been firmly capping bitcoin prices for a month.
On Monday, BTC crossed the trendline sloping downwards from July highs, confirming a bullish breakout. While one would have expected the price to now be well above the 10-day EMA hurdle, the EMA hurdle is, in fact, still intact.
The rejection at the 10-week EMA despite the upside break on Monday may now embolden the bears.
- BTC’s failure to keep gains above the 10-week EMA despite the trendline breakout has boosted the odds of a drop to $6,424 (last week’s doji candle low).
- A violation there would open up downside toward the psychological resistance of $6,000.
- A convincing break above the 10-week EMA of $6,698 would signal a continuation of the rally from the September low of $6,100 and would open up upside toward September highs above $7,400.
Disclosure: The author holds no cryptocurrency assets at the time of writing.