Bitcoin Price Bounces 15% After 14-Month Low

[Leonardo]

Bitcoin’s 15-percent recovery from the 14-month low hit yesterday may have opened the doors for short-term price consolidation.

The leading cryptocurrency by market value dropped through the support of the trendline connecting the August 2015 and August 2016 lows and fell to $3,474 yesterday – the lowest level since Sept. 17, 2017 (prices as per Bitstamp). At that level, BTC was down 38 percent from the highs above $6,300 seen two weeks ago.

The drop was short-lived, however, and prices closed yesterday (as per UTC) at $3,939 – well above the trendline – validating the oversold conditions reported by the technical indicators. As a result, a bout of consolidation could be in the offing.

At press time, BTC is changing hands at $3,920 on Bitstamp, having clocked a high of $4,069 earlier today.

The 15 percent recovery from lows seen yesterday, however, may turn out to be just another dead cat bounce if the long-term trendline support, currently at $3,830 is breached. Meanwhile, prospects of a stronger corrective rally would improve if prices find acceptance above $4,000, technical charts indicate.

4-hour chart



The bullish divergence of the relative strength index (RSI) and the falling channel breakout in the 4-hour chart indicates a bearish-to-bullish trend change. As a result, a stronger recovery rally toward $4,461 (downward sloping 50-candle EMA) cannot be ruled out.

Further gains, however, may remain elusive as the stacking order of the 50-candle EMA below the 100-candle EMA, below the 200-candle EMA indicates the path of least resistance is on the downside.

Daily chart



Over on the daily chart, the RSI has created a bullish divergence (higher low). That pattern would gain credence if the RSI moves above 30.00.

The primary trend, however, would remain bearish as long as both the 5- and 10-day EMAs are sloping downwards.

Weekly chart



As seen in the above chart, BTC is now trapped between the former support-turned-resistance of the 200-week EMA, currently at $4,174, and the three-year-long rising trendline support. Acceptance below the trendline support of $3,830 would invalidate the signs of revival seen in the 4-hour and daily chart.

View
BTC’s defense of the long-term trendline support could be a sign the sellers have run out of steam. As a result, prices could consolidate around $4,000 for the next day or two.
A break above the psychological hurdle of $4,000 would add credence to bullish setup on the 4-hour chart and open the doors to $4,500.
On the downside, a move below $3,830 (trendline support) would allow a re-test of yesterday’s low of $3,474.

Source: https://www.coindesk.com/bitcoin-price-bounces-15-after-14-month-low