• Bitcoin remains trapped in a channel down four months despite double-digit gains last week.
  • Prices could fall back on a support of $ 8,800 previously transformed into resistance by the resistance. The bearish case would be invalidated above $ 9,730.
  • A weekly close or two consecutive days (UTC) above the hurdle down $ 9,730 is needed to confirm the resumption of the bullish rally from $ 4,000 in April.

Bitcoin (BTC) announced double-digit gains last week but failed to invalidate a four-month downtrend.

The highest cryptocurrency by closed market capitalization (UTC) reached $ 9,557 on Sunday, a 16% gain over the weekly opening price of $ 8,237. This is the biggest weekly gain since the third week of June, when prices rose 20.70%, according to data from Bitstamp.

The week's performance looks more impressive considering that prices fell to five-month minimum levels below $ 7,300 on Wednesday. The breakdown, however, was reversed and prices jumped 42 percent to $ 10,350 on Friday, following Chinese President Xi Jinping's encouraging comments on blockchain adoption.

Last week's 16% increase is the ninth double-digit weekly increase in bitcoin in 2019. An increase of 26.73% in the first week of April is the largest weekly increase from 2019 to date.

At the time, prices had risen from $ 4,000 to $ 5,200, confirming a bullish escape. The last two-digit weekly gain, however, did not achieve the same result, as shown in the graph below.

Bitcoin has invalidated an established bullish high-low with a convincing move over the $ 4,236 high of December 25 in the first week of April. The confirmation of the bullish reversal paved the way for a solid recovery at $ 13,880 by the end of June.

Since then, cryptocurrency has traced a series of lower highs and lows, as illustrated by the trend charts connecting the June and August highs to the July and September lows.

Prices jumped 16% last week, but did not close over the upper edge of the four month-down channel.

The bearish channel is still valid, it is too early to call a bull market recovery. For this, the bulls must close the week (Sunday, UTC) above the resistance of the channel, currently at $ 9,730.

Last week's price increase was supported by higher trading volumes reaching its highest level since July. Therefore, a solid follow-up can not be excluded.

That said, the short-term charts call for a withdrawal at $ 8,800. At the time of going to press, BTC changes hands about $ 9,400 on Bitstamp, which represents a drop of 9.17% on a 24-hour basis.

Daily and 4 hour tables

The long upper wick attached to the candle on Friday and today indicates that buyers are exhausted above $ 10,000 and that prices can be reduced.

The bearish divergence of the relative strength index on the 4-hour line chart (top right) also indicates the exhaustion of the buyer. A bearish divergence occurs when an indicator forms highs lower, which contradicts higher highs on prices.

As a result, a new trial of $ 8,820 – the former resistance support that reached its highest level on October 11 – could be considered in the next 24 hours.

The downward divergence would be invalidated if prices exceeded $ 9,730. Bearish failures are powerful bullish signals. Therefore, a break above $ 9,730 would likely result in a quick move above $ 10,000.

Disclosure: The author does not hold any cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; charts by Trading View

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