The bitcoin price has rallied 84 percent from recent lows, suggesting a bottom is in place, although a long-term bull revival is still not certain, according to the price charts
Over the weekend, CoinDesk's Bitcoin Price Index (BPI) rose to $11,279.18, its highest level since Jan. 29. As of writing, the BPI is seen at $10,800 – up 1.59 percent in the last 24 hours. However, a bout of profit taking seems to have pushed the cryptocurrency back below $11,000.
While the "V"-shaped rally from the Feb. 6 low of $5,947.40 certainly paints a bullish picture, investors are still divided on whether BTC has found a long-term bottom below $6,000.
Bitcoin seems to have bottomed out below $6,000 as indicated by bullish doji reversal, but the weekly indicators are still less clear about the long-term prospects for the bulls, as discussed below.
Last week's green candle marked a positive follow-through to previous week's long-tailed doji candle and confirmed a bullish doji reversal. So, it appears a bottom has been made at $5,873.
That said, the position of the relative strength index (RSI) indicates the job is still half done. As discussed last week, during the bull run (2015-2017), at no point were the bears strong enough to push the RSI below the support zone of 55.00-53.00. However, the RSI did drop below the support zone during the recent sell-off, signaling a bear market.
Further, it still remains below resistance zone of 53.00-55.00 (former support). Hence, a long-term bullish reversal is still not confirmed.
Also, a look at the short-duration chart indicates a key Fibonacci level has come into play. Bitcoin prices on Coinbase's GDAX exchange created a red candle (down day) yesterday at $11,228.25, which is the 38.2 percent Fibonacci retracement of the sell-off from $19,891.99 to $5,873.
- A move of the weekly RSI above 53.00 would confirm the long-term bull reversal and open the doors for a re-test of record highs. However, on the way higher, bitcoin prices could face resistance at $17,174 (Jan. 6 high).
- Meanwhile, a drop below $9,017.41 (Jan. 17 low) would add credence to the bearish weekly RSI, and the bearish 50-day MA and 100-day MA crossover, and could yield a deeper sell-off towards $7,000.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase
Chart on mobile image via Shutterstock
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