Technical resistance at important $30,000 level

• The price of bitcoin is testing a key level that could determine whether strength or weakness is ahead.
• The cryptocurrency definitely needs to clear $30,000 to test the $35,200 resistance level, according to Fairlead Strategies.
• If bitcoin cannot reclaim $30,000, a decline back to $25,200 seems likely.

Bitcoin’s year-to-date rally of 76% has catapulted the cryptocurrency to a key technical level that should give investors clues as to whether there is more upside or downside ahead.

Fairlead Strategies founder Katie Stockton is closely watching the “psychological” $30,000 level to determine whether strength in bitcoin can continue, according to a recent note.

If bitcoin can decisively clear this threshold, Stockton expects the cryptocurrency to trend toward its key resistance level of $35,900, representing a potential upside of 24%.

“The recent breakout and positive weekly MACD support a bullish intermediate bias,” she said, referring to the moving average convergence/divergence indicator.

But a recent loss of near-term momentum means that if bitcoin fails to hold its rising 50-day moving average of $27,509, the popular cryptocurrency is likely to trend toward its technical support level of around $25,200, representing a potential downside of 13%.

Bitcoin traded up around 2% to $29,041 on Thursday, with recent bank turmoil in US banks helping to boost prices.

Stockton, according to the note, sees the likelihood of bitcoin trading lower against support rather than higher against resistance.

“Short-term oversold conditions should generate a brief pause before bitcoin resumes lower towards key support … the weekly stochastic has a decline, which, if confirmed at the end of the week, will support a longer-term pullback,” she said.

While Stockton is bearish on bitcoin in the short term and bullish on bitcoin in the medium term, she remains neutral on the cryptocurrency in the long term, proving how mixed the technical outlook for bitcoin is.

“We are long-term neutral despite improved medium-term momentum given the added hurdle of the monthly cloud … the cloud is now a headwind, acting as long-term resistance,” Stockton said.

Stockton’s “cloud” model refers to a technical indicator called the Ichimoku Cloud, which helps traders identify support and resistance levels based on past price action.