After Bitcoin price fell from $10,000 to under $4,000 in one short month, the ultra bearish, panic-induced price action has finally settled into a neutral state.
However, if bulls can break above this key level and hold it as support, the price action will flip bullish and likely go on to target $7,800.
Neutral Price Action Ready to Flip Bullish With Break Above $6,600
Bearish Bitcoin traders have been having a field day after the leading cryptocurrency by market cap failed to produce a significant and sustainable rally after breaking above $10,000.
Not only did the surge in price fail to spark FOMO amongst retail investors, some of the largest Bitcoin holders finally cashed out ahead of a potential recession, and caused a catastrophic and historic selloff.
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In less than one month’s time, Bitcoin price fell from over $10,000 to under $4,000. At the low, the price of the cryptocurrency bounced off $3,800 and quickly grew by over 80% to nearly $7,000 before falling back down again.
Since then, the asset has been ranging, causing the price action to turn neutral until a breakout to the up or downside occurs and caused traders to take positions and ride the wave to the next trading range.
A break below the previous low would be enough to cause Bitcoin price to turn back to ultra bearish, potentially hinting at lows much below as targets.
However, if bulls can reclaim $6,600, it could cause spark a surge of buyers and a push of Bitcoin price to above $7,800.
Crack monthly vwap at 6630 and I’d target 7.8 though$BTC pic.twitter.com/J7ZFjsvzs0
— CryptoTrooper (@CryptoTrooper_) March 31, 2020
What’s a VWAP and Why Would Breaking It Take Bitcoin Price to $7,800?
$6,600 is a particularly critical level for bulls to reclaim, as it’s the monthly VWAP – or volume-weighted average price.
The volume-weighted average price is a benchmark traders use to give price action an average across the day that’s based on both price and volume together. Not only does this ensure that traders are taking positions that make sense according to trading volume, but it is a tool said to reduce transaction costs by minimizing market impact.
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When price passes above or below the VWAP, it’s a signal that the trend behind the price movement is particularly strong, and could result in continuation. This tells traders not only when to take a position but increases the likelihood of a successful trade.
Given how effective the tool can be used in understanding the strength of an underlying trend, it’s clear to see why the level is particularly important for Bitcoin price.
The VWAP is currently at roughly $6,600. If bulls reclaim that level, it could be a signal that Bitcoin price will stage a strong recovery after a month of devastating price action.
Featured image from Shutterstock
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