Bitcoin Rallies $2K in 24 Hours But Price Hurdles Remain Intact

Omkar Godbole
Jul 3, 2019 at 11:00 UTC
Updated Jul 3, 2019 at 14:03 UTC
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  • Bitcoin has risen nearly $2,000 in the last 24 hours, establishing strong support at $9,600.
  • The outlook, however, would only turn bullish once the bearish lower-highs pattern is invalidated with a move above $12,448. A breakout, if confirmed, could be followed by a rise to or above the recent high of $13,880.
  • Bitcoin could fall back to $9,600 if prices fail to hold above $10,830 in the next 24 hours, validating the bearish crossover of the 5- and 10-day moving averages.

Bitcoin (BTC) has risen sharply in the last 24 hours, but a key price hurdle must still be passed to confirm a bull revival.

The premier cryptocurrency by market value was on the defensive in the early European trading hours on Tuesday, having breached support at $10,300 on the back of high volumes.

The ensuing sell-off, however, was cut short near $9,614 and prices rose back above $10,300 in the U.S. session, confirming a bullish double-bottom breakout. The price jumped to $10,700 following the breakout, as expected, and extended gains further to hit a high of $11,575 on Bitstamp earlier today.

With the $2,000 rally, bitcoin has established a base or technical support around $9,600. The quick recovery could also be considered a sign of strong demand below the psychological level of $10,000.

However, it is still too early to call a retest of the recent high of $13,880, as the cryptocurrency is yet to invalidate the most basic of all bearish patterns – a lower high. For that, the price needs to rise above the June 28 high of $12,448.

As of writing, BTC is changing hands at $11,350 on Bitstamp, representing 11 percent gains on a 24-hour basis.

Hourly and weekly charts

A high-volume break above the bearish lower high of $13,880 (above left) would confirm an end of the price pullback and open the doors to a retest of, and possibly a break above, the recent high of $13,880.

Traders may argue that the cryptocurrency has already breached the falling channel – a sign of bullish reversal.

While that’s true, the breakout wasn’t backed by a surge in buy volume (green bars). Further, sell volumes have been higher than buy volumes post-breakout – a trend that has been in place ever since bitcoin topped out at $13,800. That puts a question mark on the sustainability of gains above $11,000.

And widely followed long-term technical indicators like the 14-week relative strength index (RSI) continue to report overbought conditions with an above-70 reading. In such situations, price breakouts on the hourly and other shorter-duration charts often end up trapping the bulls on the wrong side of the market.

Hence, it’s likely safer to wait for stronger confirmation of a bull revival in the form of a break above $12,448.

Daily chart

BTC created a bullish hammer candle on Tuesday, comprising of a long lower wick – a sign of dip demand or rejection of lower prices – and a small body (the gap between open and close).

The hammer pattern is widely considered a sign of bullish reversal. The candle’s success rate, however, is higher when it appears after a prolonged downtrend, which isn’t the case here. Nevertheless, the candle does indicate that $9,614 is now the level to beat for bears.

That level could come into play if prices drop below $10,830 (today’s low), reinforcing the bearish view put forward by the cross of the 5-day moving average below the 10-day average.

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

Bitcoin image via Shutterstock; charts by TradingView

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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.