Bitcoin is back above $10,000, but the gains could be short-lived, the price charts indicate.
Having breached key support yesterday, prices on CoinDesk’s Bitcoin Price Index (BPI) fell to a two-week low of $9,627.89 at 01:14 UTC today. In the last few hours, bitcoin (BTC) has managed to regain some poise and moved back above $10,000. At time of writing, bitcoin was around the $10,300 mark.
The 15 percent drop from the weekend high of $11,942.25 signals a continuation of the series of lower highs on the price chart, suggesting the bears remain in control.
That said, the quick rebound from $9,627.89 to $10,000 adds credence to the argument that the cryptocurrency could be forming a base around $10,000.
However,, the 4.9 percent rally from the intraday low of $9,627 looks like a technical correction amid a bigger downtrend. Further, a break below $9,780 could result in sharp losses.
The above chart (prices as per Coinbase) shows:
- BTC closed (as per UTC) yesterday below $10,313 (50 percent Fibonacci retracement of 2017 low-high), signaling another victory for the bears. However, they have failed at least four times in the last two weeks to keep the prices below the key Fibonacci level, thus establishing it as an important support level.
- A falling channel marked by falling trendlines representing lower highs and lower lows.
- Five-day moving average (MA) and 10-day MA are trending lower, indicating a bearish setup.
- The 50-day MA has adopted bearish bias (is beginning to slope downwards).
Also, the bearish move below $10,313 witnessed yesterday looks strong.
- The ADX line bottomed out yesterday and rose sharply once prices fell below $10,313, indicating the bearish move is strong and prices will likely extend the decline.
- Currently, the ADX line is at 29 and rising. The above 25 readings indicate the beginning of a trend. In BTC’ case, it means the bearish move has likely just begun.
So, the cryptocurrency looks set to test $8,052 (61.8 percent Fibonacci retracement of 2017 low – high) over the next few days.
However, the above scenario may not come to fruition if the rising trendline continues to cap downside in bitcoin.
- The ascending trendline (drawn from Jul. 16 low and Sep. 15 low) is still intact. BTC’s dip below the trendline seen earlier today was short-lived.
- The previous day’s close below $10,313 (50 percent Fibonacci retracement of 2017 low-high) has strengthened the bears.
- However, the rebound from the trendline support seen today calls for caution.
- A daily close (as per UTC) below the trendline support of $9,780 could yield a drop to $$8,052 (61.8 percent Fibonacci retracement of 2017 low to high).
- Bullish scenario: A daily close (as per UTC) above $11,690 would turn the tables in favor of the bulls.
Melting ice lolly image via Shutterstock
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.