Bitcoin is maintaining a bid tone today, with prices testing the $7,000 mark.

As per the CoinDesk Bitcoin Price Index, the world’s largest cryptocurrency by market capitalization rose to an intraday high of $7,009 at 11:25 UTC. At press time, the bitcoin-U.S. dollar (BTC/USD) exchange rate is around $7,007 levels. Data from CoinMarketCap indicates that bitcoin has gained nearly 6.74 percent in the last 24 hours.

The move marks a recovery of around 25 percent from bitcoin’s recent lows near $5,000, though is still at least 10 percent short of the record highs above $7,800 hit last week.

Price action analysis suggests the tide is slowly turning in favor of the bulls, although the last major domino – the 61.8 percent Fibonacci retracement – is yet to fall.

Bitcoin chart

As discussed in the previous update, bitcoin prices have moved higher after having consolidated above the key trendline level.

The chart above shows:

The 5-day moving average (MA) has bottomed out and is now curled up in favor of the bulls, courtesy of the price gains seen today.

Bitcoin is struggling to break above $6,986 (61.8 percent Fibonacci retracement of the recent sell-off).

The RSI has moved back above 50.00 (in the bullish territory) and is trending upwards.

View

Retracement levels are based on the prior move (sell-off from record highs) and alert traders or investors to a potential trend reversal.

A close above the 61.8 percent Fibonacci (Fib) retracement level of $6,986 would indicate a revival of the bull run and open the doors for a move towards the record highs above $7,800.

As long as bitcoin trades below 61.8 percent Fib level, the 29 percent rally from the recent lows near $5,000 would qualify as a “corrective rally” in a strong downtrend (sell-off from record highs).

Bear case scenario: Failure to close above the 61.8 percent Fib level followed by a drop below the rising trendline support (seen today at $6,555) would indicate the corrective rally has ended. Prices could then proceed to test the upward sloping 50-day MA seen today at $5,723.

4-hour chart

The price action detailed under the bear case scenario would only add credence to the bearish 50-MA and 100-MA crossover seen on the 4-hour chart above and strengthen the case for a drop to $5,750–$5,723.

Also, note that the 61.8 percent Fib level of $6,986 is closely aligned with the psychological barrier of $7,000. Thus, we can conclude that $7,000 is a “make or break” level to watch out for over the next day or two.

Ship’s wheel image via Shutterstock