Strong Bounce at $6.5K Enough for a Bullish U-Turn?

Bitcoin (BTC) closed the week down at $6,900 having misplaced round $1,400 or 18.72%. Monday obtained off to a disastrous begin for the bulls, with a selloff within the Asian market session, dropping one other 5.5% discovering lows of $6,500 earlier than the bulls responded with a 13% swing again over $7,300. 

As has been witnessed lately, Bitcoin has continued to dictate the valuation throughout the cryptocurrency market as a entire. Notably, Ether (ETH) briefly traded round $130, however has since recovered and is now trying to retake $150, up round 6% for the day.

Bitcoin dominance continues to aim retaking 70% and appears probably to take action within the close to future. 

With volatility returning to the BTC market, we are going to take a look to see if that is a reduction rally or if there are indicators that that is extra of a pivotal second for the primary crypto asset.

Cryptocurrency market each day view. Supply: Coin360

Weekly chart

BTC USD weekly chart. Supply: TradingView

Bitcoin failed to shut the week above the 100-week shifting common of $7,400, which has usually spelled bother for the worth of Bitcoin. The 100 and 560-week shifting averages are on account of cross bullish subsequent week and sometimes value does reverse into shifting common crosses, so it isn’t uncommon value motion being witnessed.

Worth has finally discovered assist at a earlier extremely traded quantity node on the Quantity Profile Visible Vary, or VPVR, just under 65% of the retracement from the 2019 highs of 14Ok. 

The bounce has additionally come from across the similar value level that noticed a very sturdy response again in Might 2019. 

The Transferring Common Convergence Divergence indicator, or MACD, nonetheless implies that there’s bearish momentum. Promoting quantity was above common final week and the worth is buying and selling beneath the 100-week shifting common. So wanting at the upper time frames, one could be forgiven for concluding that the outlook stays moderately bearish. 

Day by day chart

BTC USD each day chart. Supply: TradingView

The each day chart is a little extra helpful in figuring out the development within the value of Bitcoin. It’s evident that Bitcoin has bounced off the identical $6,500 degree as occurred in Might. However moreover, Bitcoin has apparently discovered assist on the diagonal channel through which it has been buying and selling for virtually 5 months. 

This assist seems to be backed up by a bullish divergence on the each day chart. That is recognized by the On Stability Quantity (OBV) indicator printing a greater low, whereas value has printed a decrease low. That is suggesting that the selloff is being powered by diminishing promoting and that there’s hidden accumulation.

BTC USD each day chart. Supply: TradingView

The assist discovered at $6,500 is encouraging for the bulls. However there stays a bearish case that the technical goal of the descending triangle is but to finish. So there’s a chance that Bitcoin might want to do extra enterprise within the $6K value area. 

Essentially the most bearish instant outlook at the second could be $6K failing to behave as assist and a quick fall to retest the 200-week shifting common, at the moment round $5,400

Four-hour chart

 

BTC USD Four-hour chart. Supply: TradingView

Trying at the Four-hour bitcoin chart as an instantaneous information for how the remainder of the week might play out, it’s clear that Bitcoin has run into some resistance at $7,400, within the neighborhood of the 100 WMA.

Breaking and shutting the week above this degree is the principle activity for the bulls this week.

There may be additionally a clear OBV confirmed divergence on the Four-hour chart, a doable sturdy signal of a least some try by the bulls to proceed the worth appreciation; this might even be supported by a bullish divergence and cross on the Four-hour MACD.

Market sentiment

BTC USD Four-hour chart. Supply: TradingView

A glance at sentiment out there exhibits that Bitcoin funding is destructive within the perpetual swap markets. Sustained intervals of destructive funding has beforehand had an inverse relationship with the route of the worth and, thus, helps the bullish case.

The identical sentiment extends to the futures market the place it’s clear that the hypothesis over the power of Bitcoin’s futures premium dropped to lows witnessed throughout earlier corrections and bottoms. 

Moreover, the worry and greed index has dropped to new lows with the market being in excessive worry suggesting that a few of the weaker market contributors are giving up hope — a good signal for the contrarian merchants.

Concern & Greed Index. Supply: various.me

Abstract

General, the worth of Bitcoin has once more responded positively following a selloff. There are underlying indicators of a case for a bullish reversal going into the 12 months. However for the bullish situation to proceed, Bitcoin would wish to regain the 100-week shifting common at round $7.4K within the close to future.

Failure to take action will imply that Bitcoin probably must do extra testing of the bulls within the $6K vary. An absence of response right here would probably result in a a lot greater decline and check of the 200-week shifting common.

The views and opinions expressed listed below are solely these of the creator and don’t essentially replicate the views of Cointelegraph. Each funding and buying and selling transfer entails danger. It’s best to conduct your personal analysis when making a resolution.

About Tom Greenly

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