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).
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.