Bitcoin’s (BTC) high volume recovery from five-week lows may have left the bears disappointed, although a bullish reversal is still not confirmed, technical studies indicate.
The leading cryptocurrency fell to $6,100 on Bitfinex at 18:00 UTC yesterday – the lowest level since Aug. 14 – signaling a downside break of the trendline connecting the June low and Aug. 11 low (lower end of the pennant).
However, the moment of triumph for the bears was short-lived, as the cryptocurrency picked up a strong bid the very next hour and jumped to a high of $6,550. More importantly, trading volumes on Bitfinex increased by 66 percent during the price recovery.
Essentially, the breakdown of the trendline support (as per UTC close) continues to remain elusive. While the persistent failure to beat the key support could be taken as a sign of bearish exhaustion, the upside is seen gathering pace only above $6,600 (Sept. 14 high).
At press time, BTC is trading at $6,400, representing 1.10 percent appreciation on a 24-hour basis.
As can be seen, the big move higher witnessed during the 60 minutes to 19:00 UTC yesterday was backed by a jump in trading volumes. However, so far, the follow-through has been anything but encouraging.
Nevertheless, the strong rebound from $6,100 has established the round figure as a key near-term support.
Bitcoin remains stuck in a no man’s land, defined by the lower end of the pennant pattern and the Sept. 14 high of $6,600.
As of writing, the pennant support is located at $6,225. A UTC close below that level would signal a revival of the sell-off from May highs near $10,000.
On the other hand, a move above $6,600 would imply a double bottom bullish reversal. This scenario is increasingly looking likely, courtesy of repeated rebound of the lower end of the pennant pattern.
- BTC’s high volume reversal from $6,100 has raised the odds of a break above $6,600 (double bottom neckline).
- A double bottom breakout, if confirmed, would open the doors to $7,100 (target as per the measured move method).
- On the downside, a UTC close below $6,225 (trendline support) may yield a drop to $5,859 (August low) and $5,755 (June low).
Disclosure: The author holds no cryptocurrency assets at the time of writing.