This Price Chart Indicates Bitcoin’s Bulls Are Back in Business

Omkar Godbole
Dec 21, 2018 at 10:15 UTC
Updated Dec 21, 2018 at 10:27 UTC
markets

Bitcoin (BTC) is looking increasingly bullish on a key technical chart following its strong move above $4,000.

The leading cryptocurrency by market value first teased bullish reversal on Dec. 17 with the creation of an “outside reversal” candle on the widely followed 3-day chart. The early indicator of a bearish-to-bullish trend change, however, needed confirmation in the form of a positive follow-through.

Alongside BTC’s $600 rally, the cryptocurrency closed above $4,000 yesterday confirming the bullish reversal on the 3-day chart.

BTC, therefore, could rise to next major resistance of $4,400 in the near-term.

As of writing, the cryptocurrency is trading at $4,000 on Bitstamp, largely unchanged on a 24-hour basis.

3-day chart

Confirmation of the bearish-to-bullish trend change can be seen on the 3-day chart above, where the last candle has ended well above $3,590 – the high of Monday’s outside reversal candle.

Adding credence to that positive trend change is BTC’s move above the 10-candle exponential moving average (EMA) yesterday.

Further, the relative strength index (RSI) has jumped into undersold territory, validating a bullish divergence created on Dec. 15.

Daily chart

On the daily chart, BTC created a “gravestone doji” candle on Wednesday – widely considered an early sign of bearish reversal. The recovery rally from 15-month lows near $3,100 would likely have ended had BTC closed yesterday below $3,642 (Wednesday’s low).

The cryptocurrency, however, closed well above $3,924 (high of gravestone doji), reinforcing the bullish view put forward by Tuesday’s convincing close above $3,633.

Other technical studies are also biased toward the bulls. For instance, the 5- and 10-day EMAs are trending north and the 14-day RSI is holding well above 50.00.

View

  • A bullish reversal is confirmed on the three-day chart.
  • BTC could extend the ongoing rally to $4,400 in the next few days.
  • A daily close below $3,633 would abort the bullish setup, although the probability of a bearish close happening in the near term is low.

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

Bitcoin image via Shutterstock; charts by Trading View

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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.