Bitcoin’s $780 Price Recovery Makes Friday’s Close Pivotal

Bitcoin’s recovery from an 18-day low has neutralized the bearish setup, but a strong follow-through is needed to put the bulls back in charge.

AccessTimeIconSep 20, 2019 at 11:00 a.m. UTC
Updated Sep 13, 2021 at 11:28 a.m. UTC

View

  • Bitcoin created a bullish hammer candle yesterday, making today’s UTC close pivotal. A close above $10,380 (candle’s high) will likely invite stronger buying pressure and yield a rise toward $11,000.
  • A high-volume move above $10,822 would confirm a triangle breakout on the daily chart and signal a resumption of the rally from $4,000.
  • Prices may fall back to Thursday’s low of $9,600 if the cryptocurrency fails to hold above $10,000 in the next 24 hours.


Bitcoin’s $780 recovery from an 18-day low has neutralized the bearish setup, but a strong follow-through is now needed to put the bulls back in charge.

The leading cryptocurrency by market value picked up a bid around $9,600 – the lowest level since Sept. 1 – in the Asian trading hours on Thursday and rose to a high of $10,380 on Bitstamp in the U.S. trading hours.

That quick recovery saved the day for the bulls, as the cryptocurrency was looking weak below key support at $9,855, as discussed yesterday.

Notably, the price bounce from $9,600 to $10,380 has taken the shape of a candlestick pattern named “bullish hammer”, as seen in the chart below.

Daily chart

CoinDesk - Unknown

A bullish hammer comprises a long lower shadow, a small body and little or no upper shadow. It occurs when an asset erases a big early drop to end the day on a positive note at or near the day’s high.

On Thursday, BTC fell to $9,600 only to rise all the way back to $10,380 before printing a UTC close at $10,271 – up 1.18 percent on the day.

A hammer is widely considered an early warning of an impending rally. However, traders usually wait for a strong follow-through – preferably a UTC close above the hammer candle’s high – before hitting the market with fresh bids.

The focus, therefore, is on today’s UTC close. Acceptance above the hammer candle’s high of $10,380 will likely invite stronger buying pressure and yield a rise to $11,000.

As of writing, BTC is changing hands at $10,140 on Bitstamp, having clocked a high of $10,308 earlier today.

Hourly chart

CoinDesk - Unknown

BTC has created a bull flag – a continuation pattern on the hourly chart. A breakout, if confirmed, would imply a resumption of the rally from $9,600 and create room for a rally to $10,950 (target as per the measured move method).

The probability of BTC printing a convincing close well above $10,380 would rise if the flag ends with a bullish breakout.

While a close above $10,380 is expected to bode well for BTC, a full bull revival needs an upside break of a three-month contracting triangle seen in the chart below.

Contracting triangle chart

CoinDesk - Unknown

The upper and lower edges of the triangle are currently located at $10,822 and $9,450, respectively.

A close above $10,822, if confirmed, would imply a resumption of the rally from lows near $4,000 seen on April 2.

The lower edge may come into play if the cryptocurrency closes below $10,000 today, taking the shine off the bullish hammer candle.

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

Bitcoin image via Shutterstock; charts by Trading View

DISCLOSURE

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

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.

Investing in the Future of the Digital Economy
October 18-19 | Spring Studio, NYC