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Bitcoin Needs Price Gain for Bull Reversal in March

Omkar Godbole
Mar 28, 2019 at 11:15 UTC
Updated Mar 28, 2019 at 11:48 UTC
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  • Bitcoin created a bullish “engulfing candle” last month, confirming seller exhaustion. A bullish reversal, however, would only be confirmed if price closes above $4,190 (high of the engulfing candle) on March 31.
  • A bullish monthly close would open the doors to $5,000, although gains may be hampered by the crucial 21-week moving average, which is still trending south.
  • The prospect of a bullish monthly close above $4,190 would drop sharply if prices find acceptance under the 30-day moving average, currently at $3,900. That average line has served as strong support at least three times this month.

Bitcoin now has a high price target if it is to see a bullish reversal this month, price charts suggest.

The leading cryptocurrency jumped more than 10 percent in February, snapping the record six-month losing streak. More importantly, the recovery rally seen in February engulfed the price action seen in the preceding month.

Essentially, BTC created a bullish engulfing candle on the monthly chart following an 80 percent drop from the record high of $20,000 reached in December 2017. While that pattern is widely considered an early warning of potential bullish reversal, traders usually wait for more credible signs of a trend change, preferably a close above the candle’s high.

Put simply, a long-term bearish-to-bullish trend change would be confirmed if prices close (UTC) above the February high of $4,190 on March 31. That would also reinforce the bearish-to-bullish trend change signaled by several longer duration indicators over the last few weeks.

As of writing, BTC is changing hands at around $4,000 on Bitstamp, representing a 0.4 percent rise on a 24-hour basis.

Monthly chart

BTC clocked a high of $4,190 and created a bullish engulfing candle last month – likely a sign of bargain hunting following a prolonged sell-off. So far, the follow-through has been positive, confirming the bear exhaustion.

A UTC close above $4,190 on March 31 would confirm a longer-term bullish reversal and open the doors to the psychological hurdle of $5,000.

A failure to close above that key level would weaken the bullish case and could increase selling pressure.

Daily and 4-hour charts

On the daily chart, BTC bounced up from the 30-day moving average (MA) earlier this week, invalidating Monday’s bearish close below $3,920.

However, the case for a monthly close above$4,190 would strengthen if prices establish a higher high above the March 21 high of $4,055 in the next 48 hours. That would also confirm a bull flag breakout on the 4-hour chart – a continuation pattern which often accelerates the preceding bullish move.

On the downside, the 30-day MA, currently at $3,900, is the level to beat for the bears.

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.