Bitcoin (BTC) is teasing a short-term bullish reversal, having just recorded its biggest single-day gain in seven months.
Prices closed (as per UTC) 11.43 percent higher at $4,257 yesterday, marking the highest daily percentage gain since April 12, according to CoinMarketCap.
Back then, the cryptocurrency was trading above $6,900 – up 38 percent from the current price of $4,345. What’s more interesting is that the 13 percent price gain witnessed on that day was preceded by a 45 percent drop and a minor bout of consolidation.
More importantly, the big bullish move of April 12 marked the beginning of the rally, which saw prices rise to near $10,000 by early May.
Coincidentally, yesterday’s 11 percent was preceded by a 44 percent drop to 14-month lows below $3,400. Further, positive signs are building up on the short duration technical charts. As a result, bitcoin could be in for a short-term bullish reversal, similar to the one witnessed after April 12.
Daily chart
As seen above, BTC’ jumped by $1,200 on April 12, signaling the sell-off from March highs above $11,600 has ended and the bulls have regained control.
As for yesterday, BTC created a big bullish candle, validating the bearish exhaustion signaled by the previous three long-tailed candles. With the strong move higher, the 14-day relative strength has moved back into undersold territory above 30.00, confirming a bullish divergence (higher low on RSI).
So, it seems safe to say that the stage is set for history to repeat itself.
Notably, the bullish case looks stronger than it did seven months ago. This is because, the RSI hit record lows during the recent sell-off, signaling extreme oversold conditions, as opposed to above 30 readings registered before April 12.
4-hour chart
Over on the 4-hour chart, the cryptocurrency is probing the falling channel resistance of $4,320 at press time, having confirmed a double bottom breakout with a move above $4,120 earlier today.
Noably, the bull flag breakout seen in the 15-minute chart is signaling the falling channel hurdle could be breached in the next few hours. The breakout, if confirmed, would only bolster the already bullish technical setup.
View
- BTC’s 11 percent price gain has likely turned the tables in favor of the bulls.
- A falling channel breakout on the 4-hour chart, if confirmed, would open the doors to test of the psychological resistance of $5,000.
- The short-term bullish case would weaken if a convincing break above the 10-day exponential moving average (EMA), currently at $4,293 remains elusive for the next 48 hours.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via CoinDesk archives; charts by Trading View
https://www.coindesk.com/bull-reversal-bitcoin-sees-biggest-single-day-price-gain-since-april