text: Battered bitcoin may soon see solid support from a historically strong moving average price support. That could attract technical buyers.
  By Omkar Godbole
  Dec 11, 2019 at 12:22 p.m. UTC
  Updated Sep 13, 2021 at 11:48 a.m. UTC
  Stepping stones, support
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  Bitcoin may soon see solid support from the 21-month exponential moving average (currently at $7,097).
  Repeated defense of the EMA could attract technical buying. The average had acted as strong support in the five months to October 2018.
  A UTC close above $7,870 is needed to confirm a short-term bullish reversal.
  A violation at the EMA support could yield a re-test of recent lows near $6,500.
  Bitcoin is still feeling bearish pressure and could soon drop to historically strong price support below $7,100.
  The cryptocurrency fell 1.7 percent on Tuesday, reinforcing the bearish view put forward by the strong rejection above $7,600 witnessed over the weekend.
  The longer term picture is also looking bleak. Bitcoin is currently down 48 percent from the June high of $13,880 and is reporting nearly a 13 percent drop on a quarter-to-date basis, according to Bitstamp data.
  With the sellers in control, bitcoin looks set to re-test the 21-month exponential moving average (EMA), currently at $7,097. The EMA had acted as strong support in the five months to October 2018, as seen below.
  Monthly chart (2017-2018)
  Bitcoin’s sell-off from the record high of $20,000 reached in December 2017 ran out of steam at the 21-month EMA support in June 2018.
  In the following four months, sellers repeatedly failed to secure a monthly close below the average line. By mid-October, many were convinced that the cryptocurrency had bottomed out along the key level.
  Buyers, however, remained elusive and the average support, then located around $6,100, was convincingly breached in mid-November with high volumes. The violation of the support likely triggered stops on long positions, leading to a violent sell-off.
  Clearly, the 21-month EMA, currently at $7,097, is the level to watch out for in the near-term – more so, as the bears have recently struggled to breach the support.
  Monthly chart (2019)
  The long-tail attached to October’s candle indicates sellers faded near the 21-month EMA line.
  Prices did print lows below the crucial support last month, but the support remained intact on a monthly closing basis (Nov. 30, UTC).
  December’s candle has already briefly defended the support. A week ago, the technical line held ground resulting in a price bounce that fizzled out at highs above $7,660 on Dec. 9.
  If the EMA continues to restrict losses, chart-driven buying could be seen, leading to a notable price bounce.
  That said, the short-term outlook will turn bullish only above $7,870. At press time, bitcoin is changing hands at $7,200 on Bitstamp.
  Daily and weekly chart
  A UTC close above the Nov. 29 high of $7,870 would invalidate the lower-highs setup on the daily chart (above left) and confirm a short-term bullish reversal.
  However, the odds are currently stacked in favor of a move lower, as suggested by Monday’s "outside day" candle and Tuesday’s bearish follow-through.
  A break below the 21-month EMA support at $7, 097 will likely yield a decline to recent lows near $6,500.
  The long-term outlook would turn bullish if and when the cryptocurrency witnesses a falling channel breakout on the weekly chart.
  DISCLOSURE
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  Omkar Godbole
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  The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.