Bitcoin Rallies $2K in 24 Hours But Price Hurdles Remain Intact
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- Bitcoin has risen nearly $2,000 in the last 24 hours, establishing strong support at $9,600.
- The outlook, however, would only turn bullish once the bearish lower-highs pattern is invalidated with a move above $12,448. A breakout, if confirmed, could be followed by a rise to or above the recent high of $13,880.
- Bitcoin could fall back to $9,600 if prices fail to hold above $10,830 in the next 24 hours, validating the bearish crossover of the 5- and 10-day moving averages.
Bitcoin (BTC) has risen sharply in the last 24 hours, but a key price hurdle must still be passed to confirm a bull revival.
The premier cryptocurrency market value was on the defensive in the early European trading hours on Tuesday, having breached support at $10,300 on the back of high volumes.
The ensuing sell-off, however, was cut short near $9,614 and prices rose back above $10,300 in the U.S. session, confirming a bullish double-bottom breakout on the short duration charts, as tweeted by @CoinDeskMarkets.
The price jumped to $10,700 following the breakout, as expected, and extended gains further to hit a high of $11,575 on Bitstamp earlier today.
With the $2,000 rally, bitcoin has established a base or technical support around $9,600. The quick recovery could also be considered a sign of strong demand below the psychological level of $10,000.
However, it is still too early to call a retest of the recent high of $13,880, as the cryptocurrency is yet to invalidate the most basic of all bearish patterns – a lower high. For that, the price needs to rise above the June 28 high of $12,448.
As of writing, BTC is changing hands at $11,350 on Bitstamp, representing 11 percent gains on a 24-hour basis.
Hourly and weekly charts
A high-volume break above the bearish lower high of $13,880 (above left) would confirm an end of the price pullback and open the doors to a retest of, and possibly a break above, the recent high of $13,880.
Traders may argue that the cryptocurrency has already breached the falling channel – a sign of bullish reversal.
While that’s true, the breakout wasn’t backed by a surge in buy volume (green bars). Further, sell volumes have been higher than buy volumes post-breakout – a trend that has been in place ever since bitcoin topped out at $13,800. That puts a question mark on the sustainability of gains above $11,000.
And widely followed long-term technical indicators like the 14-week relative strength index (RSI) continue to report overbought conditions with an above-70 reading. In such situations, price breakouts on the hourly and other shorter-duration charts often end up trapping the bulls on the wrong side of the market.
Hence, it’s likely safer to wait for stronger confirmation of a bull revival in the form of a break above $12,448.
Daily chart
BTC created a bullish hammer candle on Tuesday, comprising of a long lower wick – a sign of dip demand or rejection of lower prices – and a small body (the gap between open and close).
The hammer pattern is widely considered a sign of bullish reversal. The candle’s success rate, however, is higher when it appears after a prolonged downtrend, which isn’t the case here.
Nevertheless, the candle does indicate that $9,614 is now the level to beat for bears.
That level could come into play if prices drop below $10,830 (today’s low), reinforcing the bearish view put forward by the cross of the 5-day moving average below the 10-day average.
Disclosure: The author holds no cryptocurrency at the time of writing
Bitcoin image via Shutterstock; charts by TradingView
