Following series of gains, experts believe that Bitcoin (BTC) could enjoy a number of corrective rally should the bulls continuous defense of key support lead to a price break above resistance at $6,400.
It would be recalled that Bitcoin suffered a downside break of the symmetrical triangle during the early US session yesterday, potentially signaling a revival of the bears who have forced a sell off from the recent highs above $7,400.
Furthermore, the bearish setup boosted the already negative set up as indicated by the rising wedge break down and the pennant breakdown on the line chart. Consequently, experts believe that Bitcoin would likely test $6,000 (February low) before the close of UTC yesterday.
However, in a twist of faith, Bitcoin bounced back from $6,170, the support of the trendline that has been connecting the June low and Aug 11 low. As at press time, Bitcoin was trading at $6,250 on Bitfinex with a trendline support seen slightly higher at $6,180. If this support continues to hold, then we may experience price to go up within the coming days.
A look at the daily chart above shows the lower end of the pennant pattern – the trendline sloping upwards from the June low – it has held strongly and proving quite difficult to break through. This for many experts signifies bearish exhaustion, given that the crucial support is holding strongly despite a 16 percent drop in price.
That argument is considered very viable especially looking at the fact that Bitcoin created a “spinning bottom” candle yesterday, signaling indecision in the marketplace.
If a UTC close today above $6,400 (previous day’s high) happens, then that would validate the spinning bottom candle, potentially pointing towards a stronger corrective rally toward $6,830 (10-week moving average).
Nonetheless, acceptance below the pennant support will likely continue the bearish rally. For now, we will continue to observe the market and see where it points to in the coming days.