Bitcoin Reclaims Key EMA, Reignites Rally..."Opens Up to $86,000"

▲ Bitcoin (BTC)

Bitcoin (BTC) has reclaimed a key moving average as support after several months, increasing the possibility of an extension of its April recovery rally.

NewsBTC reported on May 5 (local time) that Bitcoin confirmed a crucial weekly support level, opening up possibilities for further upside. Bitcoin had moved between $74,000 and $79,000 in recent weeks, failing to break above this range multiple times. However, in its weekly close, it surpassed the $78,000 mark for two consecutive weeks, confirming the 21-week exponential moving average (EMA) as support.

Market analyst Rekt Capital explained that the 21-week and 50-week exponential moving averages (EMAs) are crucial baselines in a Bitcoin rally. These moving averages often act as support in bull markets and strong resistance in bear markets. Bitcoin lost this range after a bearish cross earlier this year, but recently climbed above the 21-week EMA in its weekly close, then underwent a volatile retest, and closed above it again.

Rekt Capital assessed this weekly close as a confirmation signal of Bitcoin's price strength. However, he noted that further price stability is needed for the upward trend to continue. If the trend continues, Bitcoin could move deeper into the supply zone, and the $86,000 to $87,000 range, where the 50-week EMA is located, could become the final resistance during the ascent.

However, this range was also identified as an area where strong selling pressure could emerge. Rekt Capital warned that within this supply zone, prices are generally likely to face resistance and fail to achieve further rallies. In other words, the $86,000 to $87,000 range is not merely an upside target but a crucial gateway that will determine whether Bitcoin's recovery rally continues or is halted again.

Another key range is $82,500. This price level previously acted as strong support and corresponds to the bottom of a macro triangular structure. While the first contact in the past led to a new all-time high rally, subsequent tests of the same range saw weakened upward momentum. Currently, it is unclear whether this price level is acting as support or resistance, and the market is in the process of redefining its role.

Conversely, if Bitcoin fails to break through near $82,500, this range could solidify as a short-term ceiling. In this scenario, there's a possibility of retesting the former all-time high range between $69,000 and $74,000. Rekt Capital believes that for Bitcoin to confirm the end of the bear market, it needs to reclaim the bottom of the macro triangular structure on a monthly basis and break above the macro downtrend line situated above $96,000.

While Bitcoin has revived short-term upward potential by reclaiming the 21-week EMA, if it fails to surpass the $82,500 and the $86,000 to $87,000 ranges, the recovery rally could again be met with resistance. The market is watching whether the reclamation of the key EMA will be the starting point of a trend reversal or merely a bounce that ends in the supply zone.

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