$6.6K: Bitcoin Price Eyes New Target for Bull Reversal

Omkar Godbole
Aug 16, 2018 at 11:00 UTC
Updated Aug 17, 2018 at 09:05 UTC
markets

Bitcoin is showing signs of life, but only a break above key resistance at $6,675 would confirm a bullish reversal, technical charts indicate.

At press time, the leading cryptocurrency is changing hands at $6,470 on Bitfinex – up 10 percent from the 6.5-week low of $5,859 hit on Aug. 14.

However, the break below the key support of $6,000 (February low) was short-lived and prices moved back above $6,100 by UTC close, signaling bearish exhaustion.

More importantly, the follow-through has been positive: BTC crossed Tuesday’s high of $6,259 and jumped to $6,649 yesterday, confirming that sellers have likely run dry and bargain hunters are finding the current price too attractive to pass up.

Hence, it seems safe to say that a bullish trend reversal is in progress and would be confirmed if prices take out the inverse head-and-shoulders neckline resistance of $6,675, as seen in the chart below.

Hourly chart

BTC is creating the right shoulder of a inverse head-and-shoulders bullish reversal pattern on the hourly chart.

A move above $6,675 would confirm the sell-off from the July high of $8,507 has ended and would open the doors to $7,490 (target as per the measured height method).

That said, the daily and the 4-hour charts show that BTC could attempt a break above $6,675 in the next 24 hours.

4-hour chart

As seen in the chart above, the cryptocurrency has pierced the descending trendline, meaning the sell-off from the high of $8,507 has ended. The relative strength index (RSI) has also adopted a bullish bias (above 50.00).

Daily chart

BTC created a bullish inverted hammer candle yesterday, adding credence to Tuesday’s long-tailed (bear exhaustion) candle and confirming the cryptocurrency has likely bottomed out at $5,859.

View

  • BTC bulls are slowly gaining ground and could attack the inverse head-and-shoulders neckline resistance of $6,675 in the next 24 hours.
  • A break above $6,675, if accompanied by a pick-up in volumes, would confirm a bearish-to-bullish trend change and allow a rally to $7,490. On the way higher, BTC could encounter resistance at $6,924 (50-day moving average), $6,982 (rising trendline hurdle as seen on the daily chart), and $7,162 (100-day moving average).
  • Acceptance below $6,180 (previous day’s low) would pour cold water over optimism generated by the inverted hammer candle and would shift risk in favor of a drop below $6,000.

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

Bitcoin image via Shutterstock; Charts by Trading View

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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.