Persistent demand around the $10,000 mark appears to have not only neutralized the immediate bearish outlook on bitcoin, but also hints the cryptocurrency could be building a base for an eventual move higher.
Prices on CoinDesk's Bitcoin Price Index (BPI) fell to $9,972.29 yesterday, before witnessing a quick recovery to $11,000 levels. This is the fourth time in last week that bitcoin (BTC) has recovered losses after sinking below $10,000 levels. As of writing, bitcoin is at $10,990 levels. The cryptocurrency has appreciated by 3.38 percent in the last 24 hours, according to OnChainFX.
On Coinbase's GDAX exchange, BTC witnessed two-way business yesterday with prices hitting highs and lows of $$11, 370 and $9,945, respectively, before closing (as per UTC) at $10,824 levels.
The situation looks no different today as the rebound from the intraday low of $10,450 seems to have run out of steam above $11,000 levels. The cryptocurrency was last seen changing hands on GDAX at $10,970 levels.
The two-way price action witnessed in the last 24 hours is indicative of indecision in the marketplace and a decisive move (in either direction) would likely set the tone for the market. That said, the price chart analysis today puts the odds of a decisive move higher above 50 percent.
The above chart (prices as per Coinbase) shows:
- BTC has consistently found takers at or below $10,000 (marked by circles).
- On a daily closing basis, bears have been repeatedly failed to push prices below $10,391.02 (50 percent Fibonacci retracement of 2017 low to 2017 high).
- The previous day's doji candle indicates indecision in the market. Note that the doji candle has appeared following a 44 percent drop from the all-time highs and at critical support ($10,391.02). So it is safer to say that the candle also reflects bearish exhaustion.
Hence, BTC may be likely to see a stronger move higher and establish a bullish short-term bias.
- A positive close (as per UTC) today, preferably above $11,370 (yesterday's doji candle high), would confirm a bullish doji reversal and open doors for $13,000. A violation there would open up upside towards $15,733 (61.8 percent Fibonacci retracement of December high to January low).
- On the downside, a close (as per UTC) below $10,391 could yield a sustained move lower to $9,000.
However, while there are signs of green shoots on bitcoin chart, the market capitalization chart of all cryptocurrencies calls for caution.
Total market cap of cryptocurrencies
The market cap chart shows the formation of a head-and-shoulders bearish reversal pattern. A bearish pattern on market cap could be an indication of remaining weakness across the wider cryptocurrency market. Hence, there is merit in being cautious.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase.
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