Bitcoin is in recovery mode today.
As of writing, the bitcoin-U.S. dollar (BTC/USD) exchange rate is at $6,523, having reached a high of $6,559 so far. As per CoinMarketCap, the cryptocurrency has gained 3.54 percent in the last 24 hours.
Still, chart analysis indicates that BTC has retraced 38.2 percent of the sell-off from Nov. 8 high to Nov. 12 low. That's when prices hit a two-and-a-half week low near $5,500 - a near 30 percent sell-off from last week's record highs.
Largely believed to be triggered by the suspension of the Segwit2x hard fork, a software upgrade that might have brought a transactional boost for the cryptocurrency, investors had reportedly begun moving funds across to bitcoin cash (BCH) following its abandonment, resulting in a rally for the rival cryptocurrency.
In this way, the sharp recovery seen today has been accompanied by an equally sharp pullback for bitcoin cash, which rose more than 30 percent last week, and briefly overtook ethereum as the number two cryptocurrency by total value over the weekend.
Still, it is too early to say that bitcoin prices have found a bottom.
As discussed yesterday, the price chart analysis shows the current pullback could find a bottom around $5,000 levels. The latest chart shows the prices have moved above the key trendline hurdle, but continued gains are less than certain.
The above chart shows:
- The trendline from the May. 15 low and Oct. 5 low is capping the recovery in BTC.
- The 5-day MA and 10-day MA adopted a short-term bearish bias last week.
- The relative strength index remains below 50.00 (in the bearish territory).
- On the 4-hour time frame, the 50-DMA has adopted a bearish bias, while the 100-MA is moving sideways (neutral).
- A move above 5-day MA of $6,482 is likely to be short-lived.
- As noted yesterday, BTC is likely to trade sideways in the short-run, before resuming the sell-off and eventually finding a floor around $5,000 levels.
- Only a close today above $6,900 would signal a revival of the bull market.
Trading chart image via Shutterstock