- Bitcoin's retreat from highs near $3,900 seen yesterday has poured cold water over the bull mood generated by Wednesday's quick recovery from lows near $3,650. Therefore, the immediate outlook is neutral.
- A UTC close above $3,897 (previous day's high) would validate Wednesday's long-tailed candle and open the doors to re-test of the last week's high of $4,190. This looks likely as early signs of bullish reversal have emerged on longer duration charts.
- A break below $3,658 (Wednesday's low) would strengthen the bearish view put forward by last Sunday's high-volume sell-off and could yield a drop to $3,400.
Bitcoin has witnessed indecisive trading in the last 48 hours and would turn bullish again if prices rise above $3,897.
The crypto market leader jumped to a high of $3,897 yesterday, according to Bistamp data, having shown strength with a "V-shaped" recovery from lows near $3,650 on Wednesday.
That bullish follow-through, however, was short-lived with prices closing (UTC) largely unchanged on the day at $3,791.
So, with buyers and sellers battling it out in the range of $3,650-$3,900, the immediate outlook is neutral.
The probability of bulls coming out victorious with a move above $3,900 is high, as the dip demand witnessed on Wednesday reinforced the high-volume bullish triangle breakout, confirmed on Feb. 19. Also, so far, the follow-through to the pullback from yesterday's high of $3,897 has been anything but bearish.
BTC is currently trading at $3,810 on Bitstamp, having snapped the record six-month losing streak with double-digit gains in February.
BTC created a candle with a long upper shadow yesterday, establishing $3,897 is a level to beat for the bulls in the short-term. A UTC close above that level would validate the "buy the dip" mentality signaled by Wednesday’s long-tailed doji and open the doors to $4,190 (last week’s high).
A bull breakout, however, may remain elusive, if prices find acceptance below $3,658 (Wednesday’s low). That would put the focus back on the big bearish outside reversal candle carved out on Feb. 24 and possibly yield a deeper drop toward $3,400.
As seen above, the ascending 100-candle moving average (MA) has been limiting the downside since Feb. 24. The average is also holding above the 200-candle MA, meaning the trend is bullish.
The bullish case, however, would weaken if the 100-candle MA, currently at $3,778, is convincingly breached.
However, with the longer duration charts flashing early signs of a bullish reversal, as discussed earlier this week, the odds of BTC suffering deeper losses toward $3,400 appear low.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
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.