Back Over $4K: Bitcoin’s Price Bounce is Gathering Pace

Omkar Godbole
Nov 28, 2018 at 11:20 UTC
Updated Nov 28, 2018 at 15:37 UTC
markets

While the bitcoin (BTC) market is still predominantly bearish, seller exhaustion near $3,500 may be paving the way to stronger corrective bounce.

The largest cryptocurrency by market capitalization printed a 14-month low of $3,474 on Monday, having revived the long-term bear market with a convincing move below the crucial 21-month exponential moving average (EMA) support on Nov. 14.

Therefore, the path of least resistance is to the downside. A possible coming drop to the psychological support of $3,000, however, may happen after a notable bounce. This is because BTC has picked up a strong bid today, validating the bearish exhaustion signaled by a repeated defense of $3,500 in the last three days.

At press time, the cryptocurrency is changing hands at $4,010 on Bitstamp, representing 8 percent gains on a 24-hour basis.

Today’s positive price action also indicates the cryptocurrency is finally paying heed to oversold conditions reported by the 14-day relative strength index (RSI) since Nov. 15.

Daily chart

The long tails attached to the previous three candles, as seen in the chart above, represent bear failure near $3,500.

Further, the 14-day RSI is looking to move back into undersold territory above 30.00, having charted a bullish divergence over the weekend.

4-hour chart

Over on the 4-hour chart, BTC has cleared the falling trendline resistance (yellow line), adding credence to the bullish divergence of the RSI confirmed on Nov. 25 and the long-tailed daily candles.

As a result, BTC looks poised for a convincing move above $4,000. The recovery rally, however, may have a tough time scaling the falling channel hurdle, currently at $4,450, as the key exponential moving averages (EMAs) – 50, 100 and 200 – are still trending south in favor of the bears.

View

  • BTC looks to have carved out a temporary bottom around $3,500, and prices could rise to $4,400 in the next day or two.
  • A falling channel breakout above $4,400 may not happen in the near-term, as the EMAs are still biased toward the bears.
  • The long duration charts still favor a drop to $3,000 (psychological support). The bullish view put forward by the 4-hour chart would be neutralized if prices find acceptance below $3,500.

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

Bitcoin image via CoinDesk archives; 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.