Bitcoin Price Drops 5% But Rebound Likely, Charts Suggest

Bitcoin’s (BTC) price needs to break above $12,061 to mitigate bearish pressure.

The top cryptocurrency by market value is currently trading at $11,200 on Bitstamp, representing a 5 percent drop on a 24-hour basis.

The price drop contradicts the bullish picture painted by technical charts – the hourly chart was reporting a high-volume bullish breakout in the European trading hours yesterday.

Further, some observers called a bull revival following Tuesday’s sharp recovery from $9,600. For instance, renowned cryptocurrency trader and analyst Josh Rager tweeted Wednesday that BTC is looking "extremely bullish."

Overall, BTC was looking primed for a rally to key resistance at $12,448 yesterday. Instead, prices topped out at $12,061 and fell back to $11,800 earlier today, charting a bearish lower-high pattern.

As a result, a high-volume break above $12,061 is needed to revive the bullish view.

The falling channel breakout confirmed July 3 ended up creating a second recent bearish lower high at $12,061; the first created June 28 at $12,448.

The failure to post big gains above $12,000 could be associated with the fact that buy volumes (green bars) remained low even after the channel breakout.

A break above $12,061 would revive the bullish view put forward by the bearish channel breakout and open the doors to $13,880.

The move above the latest bearish low, however, needs to be backed by a surge in volumes.

The 5 percent drop seen overnight took the shine off the bullish hammer reversal seen in the previous two days.

That said, prices are still holding above $10,830 – the low of Tuesday’s bullish "marubozu" candle – a bullish continuation candle, which has little or no upper and lower shadows.

So, the probability of BTC invalidating the bearish lower-high pattern with a high-volume move above $12,061 is still high.

A break below $10,830 would shift risk in favor of a drop to Tuesday’s low of $9,614.

Disclosure: The author holds no cryptocurrency at the time of writing

Ball image via Shutterstock; charts by TradingView