Since dropping below the descending channel on Nov. 25, Bitcoin (BTC) has reclaimed $7,000, cleared some hefty resistance at $7,400 and now made its way up to above $7,500 by press time.
Investor sentiment remains muted as traders are unsure whether Bitcoin price has found a bottom yet but the technical setup is clearly improving on the shorter timeframe.
Despite this, the Crypto Fear and Greed Index shows sentiment still in the extreme fear zone. One would expect this figure to improve if the daily candle closes above the resistance at $7,350.
If Bitcoin can hold the $7,075 support and avoid dropping below the descending channel trendline at $6,712, investors may feel that the digital asset has bottomed and begin to open long positions in the current range.
From a momentum traders’ point of view, the price has completed the cycle of touching the upper trendline of the descending channel and also the bottom trendline so once further confirmation of a price bottom is provided, swing traders will probably consider entries within the current range.
Traders entering long positions without leverage are likely anticipating an 18% to 25% gain, assuming Bitcoin slowly works its way back up to the main trendline of the descending channel.
Some traders have also noted that if Bitcoin can gain above $7,300, this would complete the inverse head and shoulders pattern and possibly send the price to the middle support of the descending channel which aligns with the $7,800 resistance — a high volume node on the VPVR…CLICK for complete article