Against expectations, bitcoin (BTC) defended support at $6,000 over the weekend, opening the doors for a stronger corrective rally above $6,480.
Friday’s drop below $6,240 (bear flag breakdown) had created room for a drop to the June low of $5,755. Further, BTC closed below Thursday’s low of $6,183 on Friday, signaling a continuation of the sell-off from the July 25 high of $8,507.
However, while the odds were stacked in favor of the bears, a break below $6,000 did not materialize. But it was close: the leading cryptocurrency printed a six-week low of $6,008 on Saturday, before rising to $6,500. At press time, price had moved a little lower to $6,450.
Looking ahead, the corrective rally could be extended further towards $6,850 if the bulls can overcome solid-looking resistance at $6,480, as seen in the chart below.
On the 4-hour chart, BTC is currently working hard to scale the trendline hurdle of $6,480.
A convincing break above that key resistance level would validate the bearish-to-bullish trend change signaled by a bullish relative strength index (RSI) divergence over the weekend, and could be a springboard on to a stronger rally toward $6,850.
That could still be a tough task, though, as the downward sloping (bearish) 50-candle moving average (MA) is currently located at $6,580, while the 100-candle MA is soon set to cross the 200-candle MA from above in favor of the bears.
As a result, a repeated failure to take out trendline resistance could shift focus back to bearish MAs and weaken the bull case.
BTC created an inverse head-and-shoulders-like pattern on the hourly chart over the weekend and cleared the neckline hurdle earlier today, adding credence to the bullish RSI divergence seen in the 4-hour chart.
The bullish breakout has opened up upside toward $6,850 (target as per the measured height method).
- BTC will likely find acceptance above the falling trendline hurdle of $6,480 and extend the corrective rally from the six-week low of $6,000 to $6,850 in a day or two.
- Bull failure to take out the falling trendline resistance in the next few hours could prove costly and yield a re-test of $6,162 (support as per the hourly chart). A violation there would expose $6,000 (February low).
- Acceptance below $6,000 would revive the bearish view and shift risk in favor of a drop to $5,755 (June lows).
Disclosure: The author holds no cryptocurrency assets at the time of writing.
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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.
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