Bitcoin Teases Bull Move After Defense of Key Price Support

Omkar Godbole
Nov 12, 2018 at 11:00 UTC
Updated Nov 12, 2018 at 11:19 UTC
markets

Bitcoin could be in for a recovery rally, having defended a key support level over the weekend.

The leading cryptocurrency has been looking bearish over the last week. It suffered an ascending channel breakdown on Nov. 7, suggesting a temporary top had been created at $6,540, while the moving averages rolled over in favor of the bears a day later.

As a result, BTC looked likely to drop below the support of the trendline connecting the Oct. 11 and Oct. 31 lows, and move toward $6,200 over the weekend.

Instead, though, it carved out a higher low (bullish pattern) at $6,270 yesterday. More importantly, the bears failed to secure a sustained break below that rising trendline.

At press time, BTC is changing hands at $6,360 on Coinbase, while the ascending trendline support is located at $6,300.

While the rebound from the ascending trendline is encouraging, a bullish reversal would only be confirmed if prices move above $6,540 to set a higher high.

1-hour chart

As can be seen above, BTC charted a second higher low along the rising trendline yesterday, saving the day for the bulls.

BTC is also currently creating the right shoulder of an inverse head-and-shoulders bullish reversal pattern. A break above the neckline resistance of $6,390, if confirmed, would pave way for a move to $6,510 (target as per the measured height method).

The major exponential moving averages (EMAs) – 50, 100 and 200 – have shed bearish bias (are flatlined) too. So, a bull breakout could happen in the next few hours as the prices have bounced nicely off the trendline support.

4-hour chart

Over on the 4-hour chart, the bullish divergence of the MACD (moving average convergence divergence) histogram is indicating that the sell-off from the last week’s high of $6,540 has likely run its course and a recovery could soon unfold.

A bullish divergence is confirmed when an asset records a lower price low and the MACD records a higher low.

View

  • The immediate bearish outlook has been neutralized.
  • Recent highs above $6,500 could be put to the test if prices pass the inverse head-and-shoulders neckline hurdle of $6,390
  • Acceptance below the trendline support on the hourly chart would signal a resumption of the sell-off from $6,540 and could yield a test of major psychological support at $6,000.

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.