Although the leading cryptocurrency seems to have enjoyed a bounce and once gain trading slightly above the $4000 price, the Bitcoin (BTC) market is predominantly bearish. And while we have seen seller exhaustion near $3,500, the market may be preparing for a corrective bounce in the next couple of day.
The leading cryptocurrency by market cap had printed a 14-month low of $3,474 on Monday having experienced a wave of sell-off that saw a convincing move below the very crucial 21-month EMA support on November 14.
To this end, the roadmap to the least resistance point to the downside. Nevertheless, traders should expect a drop to the psychological support at $3000, after a significant bounce. We are sure you may be asking why. Well, it is because BTC has enjoyed a bounce upward after repeatedly defending the $3500 price mark in the past three days.
As at the time of writing today’s post, Bitcoin was exchanging hands at $4,182 and that represents over 13 percent gain in the last 24 hours.
More so, the positive price action been witnessed in the Bitcoin market indicates that the leading cryptocurrency is finally playing well to oversold conditions indicated by the 14-day RSI.
From the chart above, you can clearly see the long tails attached to the previous three candles, these are wicks that represents bearish failure near the $3,500 price mark.
Also, the 14-day relative strength index is looking to jump back into undersold zones above 30.00 having formed a bullish divergence over the weekend.
A look at the 4-hour chart clearly shows that Bitcoin has crossed the falling trendline resistance (yellow line). This has further given credence to the bullish divergence of the RSI formed on November 25 together with long-tailed wicks.
Consequently, we expect Bitcoin to trade above the $4,000 price mark within the next couple of days. Notwithstanding, this bounce may have a tough time scaling through the falling channel hurdle at $4,500. This is because the Key EMAs of 50, 100 and 200 are trending southwards in favor of the bears.