Despite a sharp price recovery to over $11,500 today, bitcoin's bulls are not out of the woods yet, the price charts suggest.
Coindesk's Bitcoin Price Index (BPI) has climbed 25.9 percent from the eight-week low of $9,199.59 hit yesterday at 15:44 UTC. As of writing, bitcoin (BTC) is trading at $11,590 levels.
The world's largest cryptocurrency by market capitalization has appreciated by 8 percent in the last 24 hours, according to data source OnChainFX.
The price chart analysis indicates that only a close (as per UTC) above $12,500 (prices as per Coinbase) would add credence to rebound from sub-100-day moving average (MA) levels and confirm that a short-term bottom is in place.
Bitcoin chart: Bottom in place?
The situation looks similar to that seen in mid/late March 2017, when BTC prices flirted with 100-day MA for more than a week before moving higher. Back then, the RSI was just shy of oversold conditions
Still, it appears to be too early to call a bottom.
Yesterday's long-tailed candle (big difference between intraday low and UTC close) does show strong dip demand. However, only a positive close today would validate the sharp recovery from $9,005 (previous day's low).
Bitcoin chart: Bulls need a close above $12,500
- A long-tailed candle indicating dip demand near the ascending trendline (drawn from July low and September low) support.
- Lower highs and lower lows as indicated by the descending trendline and a drop below $12,500 on Tuesday.
- 5-day and 10-day MAs carry a strong bearish bias (sloping downwards).
- The RSI remains below 50.00 (in the bearish territory).
Except for the first point, all other factors favor a drop to $8,690–$8,052 (61.8 percent Fibonacci retracement of 2017 rally).
- The recovery from $9,005 has neutralized the immediate bearish outlook.
- The daily chart suggests that a historical pattern (higher lows along the 100-day MA) could be repeated.
- However, only a close (as per UTC) above $12,500 (Dec. 30 low) would confirm a bottom is in place at $9,005 (previous day's low) and open the doors for a rally to $15,800 (descending trendline hurdle) and beyond.
- The sell-off would resume if BTC fails to hold above the 100-day MA over the next 48 hours. In such a scenario, prices could test $8,690–$8,052 (61.8 percent Fibonacci retracement of 2017 rally).
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