- A corrective bounce above $9,000 is suggested by a bullish daily chart candlestick pattern. However, that may remain elusive if buyers fail to defend the 200-day average at $8,720.
- A daily chart trend indicator is reporting a weakening of bear momentum. BTC, therefore, is likely to hold the average support.
- The bullish reversal candlestick pattern would be invalidated only if prices find acceptance under Sunday's low of $8,410.
Bitcoin (BTC) remains on the hunt for a notable recovery with prices holding above widely tracked average support.
The top cryptocurrency is currently trading above $8,760, having defended the 200-day moving average (MA) support at $8,720 early on Wednesday.
The support level is widely considered a barometer of long-term market trends and tends to attract buying or selling pressure, depending on the direction in which it is breached.
Therefore, a corrective bounce to levels above $9,000 put forward by a bullish reversal candlestick pattern confirmed Monday may remain elusive if prices find acceptance under the long-term average.
The key support has held ground so far today, keeping hopes for a recovery rally alive. The average support withstood selling pressure on Tuesday.
Bitcoin ran into offers during Tuesday’s U.S. trading hours as the stock markets dropped with the Federal Reserve's announcement of a 50 basis point rate cut. Prices briefly fell below the 200-day average but the bears failed to secure a daily close under the support level.
Bitcoin jumped 4.5 percent on Monday, confirming a bullish reversal doji candle and opening the doors for a notable corrective rally. That pattern will remain valid as long as prices are holding above $8,410 (Sunday’s low).
That said, the prospects of a quick move to resistance at $9,075 (Feb. 4 low) would weaken if the 200-day average support at $8,720 gives in. That could yield a re-test of $8,410.
However, a sustained drop below the 200-day MA looks unlikely, as the MACD histogram is registering a higher low below zero for the fourth consecutive day – a sign of weakening bearish momentum.
So bitcoin appears more likely to bounce from the 200-day MA toward resistance at $9,075 (Feb. 4 low). A violation there would expose the next resistance lined up at $9,312 (Feb. 19 low).
Bitcoin is trapped in a broadening descending channel on the hourly chart. A break above the top end of the channel, currently at $8,820, would confirm a breakout and imply an end of the pullback from Monday’s high of $8,980 and a resumption of the rally from Sunday’s low of $8,410.
That would strengthen the case for a bounce to levels above $9,000.
Disclosure: The author holds no cryptocurrency at the time of writing.
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