Bitcoin's Defense of $6K Raises Odds of Relief Rally

Bitcoin could trade on a positive note for the rest of the week, if prices close today above Sunday's high of $6,250.

AccessTimeIconJun 25, 2018 at 10:00 a.m. UTC
Updated Sep 13, 2021 at 8:06 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Bitcoin (BTC) is again trading above $6,000 and looking up, but today's closing price will likely set the tone for the rest of the week.

The leading cryptocurrency fell to $5,755 at 15:00 UTC on Sunday – the lowest level since Nov. 12 – only to make a quick recovery back above $6,000 an hour later, according to Bitfinex data.

The failure to capitalize on the drop, despite the long-run bearish technical setup, suggests that the bears are feeling exhausted, having pushed BTC lower by more than 40 percent (from $9,990 to $6,000) in the last seven weeks.

So, a relief rally may be in the offing, but that depends on whether prices close today (as per UTC) on a positive note.

At press time, BTC is changing hands at $6,150 – up 4.5 percent on a 24-hour basis.

Daily chart

bitcoin-daily-chart

BTC created a doji candle on Sunday, normally signaling indecision in the marketplace. However, when viewed against the backdrop of a 40 percent decline from May high of $9,990, Sunday's doji candle likely represents bearish exhaustion.

A notable relief rally could be in the offing if BTC closes today (as per UTC) above $6,250 (Sunday's doji candle high), confirming a bullish doji reversal.

Further, the relative strength index (RSI) has begun to diverge in favor of the bulls: creating a higher low despite a lower low in price. So, a positive price action today would also confirm a bullish divergence there.

A confirmation of bullish doji reversal and bullish price-RSI divergence would improve the odds of a falling channel breakout.

While the short-term outlook stays bearish while BTC is stuck inside the falling channel (bearish pattern), the short duration chart does favor a relief rally in bitcoin.

4-hour chart

btc-daily-rsi

The bullish price-RSI divergence only adds credence to Sunday's doji candle and suggests BTC will likely close today above $6,250 today, confirming a bullish doji reversal.

View

  • A close today (as per UTC) above $6,250 will likely allow BTC to trade on a positive note for the rest of the week. In this case, the falling channel resistance (currently located at $6,800 and seen sloping downwards to $6,600 by Friday) could be put to test.
  • A high volume falling channel breakout would open the doors to $7,700.
  • Bearish scenario: An unexpected close (as per UTC) below $6,000 (February low) would open up downside towards $5,090 (rising wedge breakdown target).

Climber image via Shutterstock

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.