- Bitcoin’s retreat from highs near $3,900 seen yesterday has poured cold water over the bull mood generated by Wednesday’s quick recovery from lows near $3,650. Therefore, the immediate outlook is neutral.
- A UTC close above $3,897 (previous day’s high) would validate Wednesday’s long-tailed candle and open the doors to re-test of the last week’s high of $3,190. This looks likely as early signs of bullish reversal have emerged on longer duration charts.
- A break below $3,658 (Wednesday’s low) would strengthen the bearish view put forward by last Sunday’s high-volume sell-off and could yield a drop to $3,400.
Bitcoin has witnessed indecisive trading in the last 48 hours and would turn bullish again if prices rise above $3,897.
The crypto market leader jumped to a high of $3,897 yesterday, according to Bistamp data, having shown strength with a “V-shaped” recovery from lows near $3,650 on Wednesday.
That bullish follow-through, however, was short-lived with prices closing (UTC) largely unchanged on the day at $3,791.
So, with buyers and sellers battling it out in the range of $3,650-$3,900, the immediate outlook is neutral.
The probability of bulls coming out victorious with a move above $3,900 is high, as the dip demand witnessed on Wednesday reinforced the high-volume bullish triangle breakout, confirmed on Feb. 19. Also, so far, the follow-through to the pullback from yesterday’s high of $3,897 has been anything but bearish.
BTC is currently trading at $3,810 on Bitstamp, having snapped the record six-month losing streak with double-digit gains in February.
BTC created a candle with a long upper shadow yesterday, establishing $3,897 is a level to beat for the bulls in the short-term. A UTC close above that level would validate the “buy the dip” mentality signaled by Wednesday’s long-tailed doji and open the doors to $4,190 (last week’s high).
A bull breakout, however, may remain elusive, if prices find acceptance below $3,658 (Wednesday’s low). That would put the focus back on the big bearish outside reversal candle carved out on Feb. 24 and possibly yield a deeper drop toward $3,400.
As seen above, the ascending 100-candle moving average (MA) has been limiting the downside since Feb. 24. The average is also holding above the 200-candle MA, meaning the trend is bullish.
The bullish case, however, would weaken if the 100-candle MA, currently at $3,778, is convincingly breached.
However, with the longer duration charts flashing early signs of a bullish reversal, as discussed earlier this week, the odds of BTC suffering deeper losses toward $3,400 appear low.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; charts by Trading View