The crypto carnage that started at the end of last year may have ended at the start of February. In recent weeks, prices have stabilized across the board as fears over the clampdown on crypto exchanges abated. Bitcoin, the most popular crypto, has managed to recover from sub $6,000 to trade above $10,600 at the time of this writing. Ethereum, Litecoin, Bitcoin Cash, and Neo have all recovered, too, although Ripple has lagged behind somewhat.
But despite the rebound, Bitcoin still remains stuck between a rock and a hard place. As can be seen on the daily chart, resistance around the lower bound of the $11,200-$11,800 range continues to hold the price down. As well as prior support and resistance, this is where a bearish trend line comes into play. The 50-day moving average, which comes in at 10600, has been providing additional resistance. This moving averages had provided significant support in the past.
But the ability of Bitcoin to hold its own above the 200-day average and the long-term trend line suggests that soon it will clear that $11,200-$11,800 resistance range. If and when it does, then we will have some confirmation that the bull trend has potentially resumed. In this potential scenario, Bitcoin could take off again with the next bullish objectives coming in at $12,800 (50% of the drop from near $20K), $14,400 (61.8% Fib against the all-time high) and $15,500, an old support and resistance level.
Meanwhile, support for Bitcoin is seen around $8,950 to $9,500, an area which was previously support and resistance. The upper end of this range has already been successfully tested. But in the event Bitcoin breaks below this support area, then we could see a drop to $6,500 or perhaps even $5,000 next, as the buyers rush for the exits.
So, in summary, Bitcoin looks like is trying to form a base. However, it still needs to repair further damage before one can conclude that the corrective trend is over.