Bitcoin Price Must Now Break $9.5K to Prove ‘Xi Pump’ Wasn’t a Fluke

Bitcoin price (BTC) is currently locked in a battle to stay above the descending channel and have another run at the recent high at $10,540. In order to do this, first, the digital asset needs to overtake the resistance levels at $9,300 and $9,400. 

Was the “Xi pump” a fluke? 

As Bitcoin fights to stay above this all-important line, traders are likely beginning to wonder whether or not last week’s explosive pump to $10,540 was simply a one-off driven by Chinese President Xi Jinping’s call for China to accelerate the development of blockchain technology. 

Crypto market data daily view. Source: Coin360

But despite this morning’s breakout to $9,433, Bitcoin is still searching for solid ground after pulling back from the blow-off top at 10,540. 

BTC USD daily chart. Source: TradingView

Today’s move did bring Bitcoin above the descending channel but at the time of writing a higher was not achieved and the digital asset is still posting lower highs and lower lows. As shown on the daily chart, there has been a sharp decrease in trading volume and for today’s upside move to see a continuation, the volume will need to sustain. 

Key BTC support/resistance levels to watch for

A number of traders expect Bitcoin to drop to the CME gap at $8,750. This point is also near the 20-MA of the Bollinger Band indicator, a point which is often revisited after price breaks down after a rally. 

Bitcoin remains above the 200-daily moving average (DMA) but a drop below $8,650 would change this status and currently, the 50-DMA continues to curl away from the 200-DMA, avoiding the dreaded ‘death cross’. A drop below to $8,500 and below could bring the moving average closer to pulling below the 200-DMA. 

As discussed in the previous analysis, the 111 and 128 DMA remain too close for comfort but at this point, they have yet to cross. Traders will notice that bull and bear cross overs of these moving averages preceded the April 2019 rally and were a marker of a trend change

Although pierced for a third time this morning, $9,100 remains soft support and below this $9,020. If Bitcoin can overtake $9,300, then over the short-term, the asset needs to overcome key resistance levels at $9,573 and $9,800 in order to begin a bullish reversal. 

Traders will note that the moving average confluence divergence on the 4-hour timeframe is teasing a bull crossover and the relative strength index has climbed back above 50. 

BTC USD 4-hour chart. Source: TradingView

On the 4-hour time frame, we can see Bitcoin trading within a narrowing wedge and the Bollinger Bands are tightening as this morning’s move to $9,433 brought price above the 20-MA but failed to extend past the upper arm.

Today’s move also brought the price above the 12 and 26 EMA but failure to hold above $9,200 will likely drop the price back to the base of the wedge it trades above now. 

Bitcoin’s price action is also following a similar pattern of dropping below the descending channel trendline (black line) then pumping above the descending trendline of the wedge (blue line). One will note the hourly candles following this morning’s high volume spike are already mirroring this pattern, hence the suggestion that Bitcoin needs to move above $9,573 to convince traders that the asset has turned bullish.

BTC USD 1-hour chart. Source: TradingView

Looking forward 

BTC USD weekly chart. Source: TradingView

Zooming out to the weekly timeframe shows Bitcoin above the multi-month descending channel and on the verge of changing the trend. The close at $9,540 did not produce a weekly higher high but Bitcoin rides above the 20-WMA and the MACD line has flattened as the histogram flipped pink off the strength of the most recent moves. 

Bitcoin does not immediately need to gain above $10,540, but a pattern of higher highs and higher lows needs to occur on the daily and weekly time frame to set up an eventual overtaking of the local high. As shown by the volume profile visible range, a move above $9,400 resistance is required, after which a quick run to $9,800 could occur. 

Alternatively, if Bitocin cannot hold $9,200, the price will likely drop back to the base of the wedge at the $9,000 support. Below this point, traders will likely target the $8,700 to $8,350 area where there are a series of supports. 

The views and opinions expressed here are solely those of the author (@HorusHughes) and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.