Bitcoin (CRYPTO: BTC) jumped almost 6% at one point during Monday’s 24-hour trading session before selling off to trade mostly flat by midafternoon.
The short rebound took place after Binance CEO and founder Changpeng "CZ" Zhao took to Twitter to try and calm investor fears over the liquidity crisis caused by the decimation of Sam Bankman-Fried's FTX trading platform last week.
Zhao announced that he’s forming an “industry recovery fund” to support “strong” companies and projects in the crypto sector that are struggling with liquidity, according to a report.
The FTX debacle caused traders and investors to begin withdrawing their crypto over fears the platform’s ruin would have a cascading effect on other exchanges.
When Bitcoin dipped under the $16,000 mark, bulls came in and defended the area, which indicates the level is acting as a strong support zone for the crypto. The area also acted as support on Nov. 10, causing a big 11% surge on that day.
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The Bitcoin Chart: For the last five 24-hour trading sessions, Bitcoin has been trading mostly sideways within the range of Nov. 9, which has caused the crypto to form five inside bars. The inside bars have printed on mostly decreasing volume, which confirms consolidation.
- The consolidation could be either accumulation for a move higher or distribution for a move lower. The inside bars lean bearish because Bitcoin was trading lower recently, but positive news in the sector could cause the crypto to break bullishly from the range and rebound into an uptrend.
- The recent short bounces, paired with sideways trading, have caused Bitcoin’s relative strength index (RSI) to rebound from oversold territory, but the indicator is still measuring in low at about 35%. If Bitcoin breaks bearishly under $16,000 an immediate oversold bounce is likely to come because it will drop the RSI under the 30% mark.
- If Bitcoin breaks up from the Nov. 9 mother bar, the crypto will regain the eight-day exponential moving average as support, which would give bulls more confidence going forward. If that happens, Monday’s low-of-day may serve as a higher low, which could also indicate an uptrend is on the horizon.
- Bitcoin has resistance above at $17,580 and $19,915 and support below at $16,000 and $15,000.
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