Bitcoin (BTC) made a recovery in its weekly close on August 28, thanks to the rise of risk assets following China’s tax cuts. The BTC/USD 1-hour chart showed that Bitcoin reached $26,226, its highest level since August 25, fully compensating for the weakness seen overnight.
The positive sentiment in the market was driven by news that China had cut tax on stock trading by 50%. This news buoyed U.S. futures, with the S&P 500 and Nasdaq Composite Index opening up 0.6% and 0.7% respectively. Traders and analysts started eyeing the trading landscape for the coming week, with the focus on key support levels.
Michaël van de Poppe, founder and CEO of trading firm Eight, highlighted the 200-week exponential moving average (EMA) at around $25,700 as a crucial support zone to protect. He emphasized the importance of staying above this level and compared the current market situation to the sideways period observed in 2015-2016. According to van de Poppe, if the 200-Week EMA sustains, it could be a sign that Bitcoin has bottomed out and could present a massive entry point for traders.
However, van de Poppe also warned that there is a possibility of Bitcoin sweeping below the 200-Week EMA on lower timeframes. In that case, he outlined two potential strategies for traders. The first strategy involves an aggressive long entry at $25,750 after the sweep, while reclaiming this level. The second strategy involves a sweep from $25,200 to $24,700-25,000, where bullish divergences on higher timeframes could signal a reversal. Nonetheless, van de Poppe stressed the importance of reclaiming $25,750 for these strategies to remain valid.
Another popular trader, Titan of Crypto, also identified $25,900 as a prominent zone of interest. He emphasized that if this level holds, a pullback to the Tenkan at around $28,400 could be expected.
In terms of technical indicators, Bitcoin’s relative strength index (RSI) remained “very low” for the second week in a row. The RSI measures whether an asset is overbought or oversold at a given price point, and its low levels suggest a potential bottom and a minimum 30% rise in Bitcoin’s price.
However, it is important to note that this article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers are advised to conduct their own research before making any decisions.
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