In my prior analysis, Finally, a Breakout!, I had mentioned that Bitcoin may rise further to challenge the previous strong support level of $231. The price did advance to $230.79 followed by minor booking, which has brought the price down to $228.49.
With Bitcoin unable to overcome the supply pressure near the resistance level, it becomes important to question whether it remains a buy on dips candidate or not. Let’s find that out with the technical analysis of the 240-minute BTC/USD price chart below.
Bitcoin Chart Structure – As can be seen from the chart above, Bitcoin first retested the level of $227 and then jumped to higher levels. The jump stretched the price to the previous supporting level (currently the resistance) of $231. Now, when the price comes down, bulls will be looking to add to their long positions.
Fibonacci Retracements – The cryptocurrency failed to cross the 50% Fibonacci retracement hurdle of $231. However, the 61.8% retracement of $227.20 should still act as a cushion to the price.
Moving Average Convergence Divergence – Both the MACD and the Signal Line are presently in the positive territory, owing to the strong underlying momentum. The latest MACD reading is 1.1538 while that of the Signal Line is 0.8181.
Momentum – The Momentum indicator piles on more gains as it advances from 3.0500 to 3.7000. Positive Momentum indicator readings are good for the underlying.
Relative Strength Index – The RSI indicator stays relatively flat since yesterday, down from 59.3945 to 59.1174.
The technical considerations discussed above clearly tell that Bitcoin still has the structure and the momentum needed to climb higher. Therefore, traders should consider buying the cryptocurrency as the price drops but must revise their stop-loss to $227. The target for the upside is $235, around which the cryptocurrency may face a fresh round of selling. Volatility should remain relatively normal during this week.