Bitcoin (BTC) has finally climbed past the 50 day moving average. Yesterday when Ethereum (ETH) was trading well above the 50 day moving average but BTC/USD faced a strong rejection at the 50 day MA, investors were worried as to what is Bitcoin (BTC) really up to. However, as many expected Ethereum (ETH) showed Bitcoin (BTC) the way and the price closed below the 50 day moving average after all. The price has now started a new day in the green and is trading around $3,800 eyeing a rally towards $4,500 which coincides with the 38.2% Fibonacci retracement level. The price has now broken out of two bullish pennants at the same time and is expected to continue to rise in the days ahead.
RSI for BTC/USD has now once again entered overbought territory which means there is a strong probability that the price might once again enter sideways movement for a while before continuing upwards. That being said, a move to the upside is now more probable than before and the price will be expected to test the previous market structure in the weeks ahead. I believe that without testing the previous market structure, BTC/USD cannot make a decisive move. This is because a retest of the previous market structure around $6,000 will have some important consequences that would pave the way for a decisive move either to the upside or the downside. If BTC/USD tests the previous market structure and faces a strong rejection, it will convince the bulls that the bottom is not in yet. On the other hand, if the price breaks past the previous market structure, it will convince the bears that the bottom is in.
Without testing the previous market structure, neither the bulls nor the bears can know for sure what is going on and the price will not be able to make a decisive move to either side. If the price continues to fall from current levels or even from $4,500 without testing the previous market structure, it will not be able to fall below its December, 2018 low. Then it may rise from there and will be expected to do the very same thing: test the previous market structure. Some analysts have pointed to a possibility of the price breaking straight towards $20,000 and then falling below $3,000. This goes on to show how most people in this market lack basic understanding of the factors that influence sentiment shifts and pave the way for trend reversals.
Now that BTC/USD is back above the 50 day moving average, there is one strong bullish possibility that cannot be ignored and that is the golden cross resulting from the 50 day MA (green) crossing above the 200 Day MA (red). A lot of people think if that were to happen, we would see the price rocket straight to the moon, but I disagree. There is no doubt that the golden cross is a very bullish event that would see the price rally towards new highs in the long term. However, even if we see a golden cross, I still believe that if the price faces a rejection at the previous market structure around $6,000, it will still fall back to the previous low if not lower regardless of the golden cross.