Bitcoin Takes a Dive After the Longest Daily Winning Run Since September
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- Bitcoin’s ongoing pullback could be extended further to the former resistance-turned-support of $9,586. Acceptance below that would expose the next base at $9,188.
- A UTC close below $9,075 (Feb. 4 low) would invalidate higher lows on the daily chart and confirm a short-term bearish reversal.
- The case for deeper pullback would weaken if prices rise above $10,010, violating the bearish setup on the hourly chart.
Bitcoin is feeling the pull of gravity at press time, despite having confirmed its longest daily winning streak since September on Sunday.
The top cryptocurrency by market value dived from $10,197 to $9,732 during the Asian trading hours and is currently trading at $9,850, according to CoinDesk’s Bitcoin Price Index.
The
sharp pullback has blanketed Sunday’s ascent from $9,900 to $10,180 and is suggesting
bullish exhaustion.
Bitcoin
closed out (UTC) Sunday with a 2.75 percent gain, having risen by 5, 1.4, 0.5 and
1 percent on Wednesday, Thursday, Friday and Saturday, respectively.
That is the longest daily winning streak in five months, as seen below.
Bitcoin produced five straight green candles (days with net gains) from Aug. 30 to Sept. 3, marking a convincing move higher from $9,350 to $10,783. The rally, however, ended up recharging bears’ engines for a deeper slide.
The latest winning streak is preceded by a sharp rise from lows near $6,850 observed in early January. Such solid rallies are often followed by corrections.
Bitcoin could soon test dip demand by revisiting deeper support levels.
Daily chart
Bitcoin ended Sunday with a green “marubozu” candle, which comprises a strong body and small or no wicks. It indicates that buyers were in control from the open to the close, and is reflective of strong bullish sentiment.
So
far, however, the follow-through has been negative. In fact, today’s red candle
has already engulfed Sunday’s bullish marubozu.
A failed bullish marubozu at multi-month highs, or after notable price rallies, often precedes a deeper pullback.
So, a slide to the former resistance-turned-support at $9,586 (Nov. 4 high) cannot be ruled out. A violation there would expose the Jan. 19 high of $9,188 and the Feb. 4 low of $9,075. The short-term outlook would turn bearish if prices find acceptance below $9,075, invalidating the higher-lows setup.
If the support at $9,586 holds ground, the bulls will likely once more target the Oct. 26 high of $10,350.
Hourly chart
Bitcoin has lost its upward trajectory, as indicated by the downside break of the ascending trendline.
The
ongoing drop looks to have legs as it is backed by an uptick in selling volume,
as represented by red bars.
The case for a deeper pullback to $9,586 would be invalidated if prices rise above $10,010 with strong volumes, invalidating the lower-highs setup on the hourly chart.
Disclosure: The author holds no cryptocurrency at the time of writing
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