Bitcoin’s (BTC) sharp recovery from two-week lows has increased the odds of a stronger rally towards $6,400, technical research indicates.
As of writing, the leading cryptocurrency is changing hands at $6,245 on Bitfinex.
BTC was expected to fall below $6,000 in the last twenty five hours as the bears were on the offensive following an inverted flag breakdown.
Nevertheless, the intraday oversold conditions probably place a floor beneath bitcoin prices in the two-week low of $6,080, helping it chart a good bounce to $6,283 (today’s high).
While it’s too soon to call a bullish reversal, the change of luck has saved the day for the BTC bulls. Furthermore, the likelihood of BTC’s cost calculating a picture-perfect inverse head-and-shoulders bullish reversal pattern could have fallen sharply had BTC found acceptance below $6,000.
Further, the sharp recovery from $6,080 to $6,283 has opened the doors to re-test of $6,400, the cost chart analysis indicates.
The preceding chart shows BTC generated a falling wedge pattern over the last four days, as represented by lower highs and lower extremities. Prices crossed the wedge resistance yesterday with power (backed by a pickup in bulk ), signaling the pullback from Monday’s high of $6,820 has ended.
The falling wedge breakout additionally affirmed the bear-to-bull trend change signaled from the bullish price-relative strength indicator divergence (higher low on the RSI).
Therefore, BTC will probably find acceptance over the immediate resistance $6,270 (50-hour moving average) and grow towards the descending 100-hour MA, currently situated at $6,404.
Whilst the hourly chart has adopted a bullish bias, the daily chart is still biased to the bears, hence the bulls are cautioned against being too rough.
The 5-day and 10-day MA are trending southwest, implying a bearish bias. The relative strength index (RSI) is holding below 50.00, indicating the bears are in control.
BTC could strike the $6,400 mark, but further gains are ruled out for the time being as the descending (bearish) 5-day MA and 10-day MA are located at $6,366 and $6,500, correspondingly.
That said, if BTC manages to close (as per UTC) today above 10-day MA, then the doors will open for a re-test of the Monday’s high of $6,820.
Bearish scenario: A failure to produce a substantial move higher despite the bullish price RSI divergence along with the falling wedge breakout could shift risk in favor of a fall to a latest low of $5,755. The downside move will probably gather pace if BTC fails to hold over $6,080 (past day’s large ) over the weekend.
Disclosure: The writer holds USDT throughout the time of writing.
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