- Bitcoin's drop to six-day lows below $3,700 has taken the shine off the bullish "long-tailed doji" created on Feb. 27. A bearish reversal would be confirmed if prices see a UTC close below $3,658 (low of long-tailed doji) and could yield a sell-off to recent lows near $3,300.
- A bearish move below $3,658, however, may not happen or could be short-lived, as a number of technical indicators on the weekly chart are flashing early signs of bullish reversal.
- On the higher side, a break above $3,897 – high of the candle with long upper shadow created on Feb. 28 – is needed to strengthen the bullish case. A UTC close above that level would open the doors to $4,190 (February high).
Bitcoin (BTC) has taken a knock Monday and the sell-off could intensify if key support near $3,650 is breached.
The leading cryptocurrency by market value is currently trading at $3,700 on Bitstamp, down more than 3 percent on a 24-hour basis, having clocked a low of $3,670 earlier today.
Essentially, BTC has revived the sell-off from the highs near $3,900 hit on Feb. 28 with a drop to six-day lows below $3,700 and bearish pressures would further strengthen if prices find acceptance below the support at $3,658. That would invalidate the bullish view put forward by the "long-tailed doji" created on Feb. 27.
It is worth noting that the longer duration indicators are increasingly calling an upside move. For instance, the weekly chart moving average convergence divergence (MACD) histogram has jumped to its highest level since January 2018.
As seen above, BTC is currently probing the support at $3,683, which marks the confluence of the former resistance-turned-support of the upper edge of the triangle and the 100-day moving average (MA).
On the higher side, a move above $3,897 (high of the candle with long upper shadow) would strengthen the bullish case and allow a rally to $4,190 (February high).
The bullish scenario looks likely, courtesy of growing signs of seller exhaustion on longer duration charts.
The 5- and 10-candle MAs on the weekly chart have produced a bullish crossover for the first time since the third quarter of 2018.
carved in December. The MACD histogram is most bullish in over 12 months, as noted earlier.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
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