Bitcoin Defends Psychological Support Line After Price Dip to $4,900

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• Bitcoin dropped to a low of $4,900 on Coinbase after a continued sell-off was seen from its April 11 breakdown. BTC has since moved back above $5,000 and is tentatively holding that line.
• Prices remain bullishly above the 200-daily moving average at $4,548, but would flip to short-term bearish with a strong close below $5,000.
• The 6-hour candle has closed below a key resistance line at $5,050 and will need to be scaled before the end of today's trading session.

Bitcoin dipped to a low of around $4,900 earlier today (according to Coinbase prices), but has since fought its way back above the $5,000 psychological support line.

Thursday's trading closed slightly up, after bitcoin back-tested support at $4,994 as a result of a failed breakout from the bullish ascending triangle pattern on the daily chart.

Prices would likely find a strong base of support at $5,000 should they maintain above that level. Conversely, a close below the psychological level would expose prices to greater losses with a potential drawdown to $4,841, as per Fibonacci retracement theory.

At time of writing, prices are trading at $5,070, as per CoinDesk BPI data. Modest levels of bearish volume on the intraday charts hint at greater selling momentum in a tug-of-war between buyers and sellers, but that could change given enough time above the $5K mark.

Daily chart

As long as prices remain above the 200-daily long-term moving average (orange line) at $4,548 we can consider bitcoin's price action to be bullish in the mid-term.

The daily RSI shows that bitcoin's latest move has resulted in a pullback from overbought conditions with a dip below the extreme 70.00 line, currently 66.1.

If the cryptocurrency manages to cement a low at current levels and find more gains, it would result in a hidden bullish divergence and would go a long way in restoring lost confidence.

Six-hour chart

The six-hour chart shows a loss of bull momentum with an unsuccessful attempt to close above a key resistance line (formerly support at $5,050) in recent hours, but is beginning to show promise for more upside action.

That well-defined resistance needs to be scaled by the weekly close. A failure to do would place the bulls on shaky ground, having failed to make the most of the ascending triangle breakout late on Wednesday.

Hope remains, though, thanks in part to a long-tailed wick on the prior candle, hinting at consolidation and a potential push higher.

Disclosure: The author holds no cryptocurrency at the time of writing.

Bitcoin image via Shutterstock; charts via TradingView