Bull Breather? Bitcoin Market Turns Indecisive at Two-Month High

Bitcoin's bulls are showing signs of exhaustion, having engineered a speedy rally to $8,900.

AccessTimeIconJan 16, 2020 at 11:00 a.m. UTC
Updated Sep 14, 2021 at 1:51 p.m. UTC

View

  • Bitcoin is facing temporary bullish exhaustion, according to Wednesday’s “doji” candle.
  • The case for a notable pullback will strengthen if prices break below Wednesday’s low of $8,555. That could yield a drop to $8,200.
  • A move above the hourly chart resistance at $8,705 would allow a re-test of Wednesday’s high near $8,900.

The bitcoin market is telling a tale of bullish exhaustion with indecisive price action following a rise to the highest point since November.

The top cryptocurrency witnessed two-way business on Wednesday. Prices rose from lows near $8,550 seen during the Asian trading hours to a two-month high of $8,903, only to end the day (UTC) on a flat note at $8,808, according to CoinDesk’s Bitcoin Price Index.

Essentially, bitcoin created a “doji” candle, which is widely considered a sign of indecision in the marketplace.

In this case, however, the candle could be considered a sign of buyer exhaustion, as it has appeared following a sharp rally from $6,850 to $8,900 and suggests the indecision is predominantly among the bulls.

The price action seen so far today is telling the same story. The cryptocurrency fell from $8,800 to $8,575 during the Asian trading hours and has struggled to chart a strong bounce ever since. This is in contrast to the quick reversals from sub-$8,600 levels seen in the previous two days.

At press time, bitcoin is trading near $8,600, representing a one percent drop on a 24-hour basis.

Daily and hourly charts

CoinDesk - Unknown

Bitcoin now risks a deeper pullback below Wednesday’s low of $8,555. A drop through that support would validate buyer exhaustion signaled by the doji candle (above left), attracting selling pressure.

It would also confirm a double-top breakdown on the hourly chart (above right). That would open the doors for $8,210 (target as per the measured move method).

That said, the short-term outlook would turn bearish only if any pullback ends up violating the bullish higher low of $7,667 created Jan. 10.

That, however, looks unlikely with the five- and 10-day averages continuing to trend north. These averages, currently located at $8,508 and $8,276, respectively, tend to reverse pullbacks when they are on an upward trajectory. Further, the longer duration charts have recently turned bullish.

Wednesday’s high of $8,903 will likely come into play if prices violate the lower high of $8,705 seen on the hourly chart in the next few hours.

A break above $8,900, a level that has acted as strong resistance in the last 48 hours, would likely invite stronger buying pressure, yielding a quick move to the 200-day average at $9,100.

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


Read more about

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.