Bitcoin Price Jumps 10%, But Bull Reversal Still $700 Away

Bitcoin logged its biggest daily gain in seven weeks on Wednesday, neutralizing the bearish scenario.

AccessTimeIconDec 19, 2019 at 11:08 a.m. UTC
Updated Sep 14, 2021 at 1:51 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

View

  • Bitcoin logged double-digit gains on Wednesday, neutralizing the short-term bearish view.
  • A close above $7,870 (Nov. 29 high) is now needed to invalidate the lower-highs set up and confirm a short-term bullish reversal.
  • That looks likely, as one daily chart indicator is flashing a bullish divergence and Wednesday's engulfing candle signaled seller exhaustion.

Bitcoin surged by over 10 percent on Wednesday – the biggest single-day gain since Oct. 25, according to CoinDesk’s Bitcoin Price Index

Notably, prices had slumped to seven-month lows below $6,500 around lunchtime (UTC), but the breakdown was quickly undone and the cryptocurrency was trading above $7,400 before midnight.

The rebound from multi-month lows is a tell-tale sign of seller exhaustion – especially, as it erased the losses seen in the preceding eight days. 

Wednesday’s spike has neutralized the immediate bearish case. That said, a bullish reversal would be confirmed only if and when prices rise above the Nov. 29 high of $7,870. That would invalidate the most basic of all bearish patterns – a lower-highs setup.

With bitcoin currently trading at $7,170, the bull reversal is still $770 away. 

Daily chart
daily-chart-16

Bitcoin has charted (price via Bitstamp) a series of lower highs (arrows) and lowers lows over the last five months. 

The last lower high at $7,870 was printed on Nov. 29 and is still intact. A UTC close above that level is needed to confirm a short-term bearish-to-bullish trend change, as noted above. 

A move above that level shouldn't be ruled out, as the 14-day relative strength index (RSI) has diverged in favor of the bulls. A bullish divergence occurs when an indicator prints higher lows, contradicting lower lows on price, and is considered an early warning of an impending corrective bounce. 

Additionally, Wednesday’s big bullish engulfing candle is indicating seller exhaustion and would gain credence if prices find acceptance above $7,450 (the candle's high) in the next 24 hours. That would further strengthen the case for a test of resistance at $7,870. 

Both patterns would be invalidated if prices drop below $6,428, although that looks unlikely at press time. 

Weekly chart
weekly-chart-10

The overall outlook would turn bullish if and when the falling channel on the weekly chart is breached to the higher side. Currently, the channel resistance is located at $8,463.

Disclosure: The author currently holds no digital assets.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.