- Bitcoin jumped above $7,400 on Wednesday, confirming a bullish breakout on the short duration technical charts.
- Resistance at $7,800 could come into play in the next 48 hours. A violation there would expose $8,200.
- The nascent recovery will fall apart if Wednesday’s low of $6.848 is breached. At press time, that looks unlikely.
Bitcoin eked out the biggest single-day gain in four weeks on Wednesday, confirming a short-term price breakout and opening doors for a test of resistance at $7,800.
The number one cryptocurrency printed a UTC close at $7,528 on Bitstamp, representing a 5.15 percent gain on the daily opening price of $7,168. That’s the biggest single-day price rise since Oct. 26. On that day, BTC rose by 6.81 percent and printed highs above $10,300.
Wednesday’s gain looks more impressive if we take into account the rejection of lower prices seen during the European trading hours. Prices had dropped to $6,850, but were quickly reversed and the cryptocurrency ended the day on an optimistic note, validating the seller exhaustion signaled by key technical indicators.
More importantly, BTC activated twin bullish cues on the intraday charts with a convincing move above $7,400 and could continue to draw bids in the short-term.
At press time, BTC is changing hands at $7,480, having hit a high of $7,670 during the U.S. trading hours on Wednesday.
Both an upside break of the descending trendline and inverse head-and-shoulders breakout indicate the path of least resistance is to the higher side.
The latter represents a transition from the lower-highs, lower-lows set up to one of higher lows and higher highs. It’s considered a potent bullish reversal pattern if it appears following a significant price drop, which is the case here.
The bullish reversal pattern has created room for a rally to $8,200 (target as per the measured move method).
On the way higher, the pair may face resistance at $7,800 (horizontal line) and the descending 100-candle average, currently at $7,936.
The 50-hour average is beginning to trend north – a sign of strengthening upside momentum – and looks set to cross above the 200-hour average in coming days. The impending bull cross may invite stronger buying pressure, possibly yielding a rally to $7,800.
That said, a short-term bullish reversal would only be confirmed if the current three-day candle closes (Friday, UTC) above $7,380.
On the downside, Wednesday’s low of $6,848 is key support, which if breached with strong volumes, would kill the nascent recovery and shift risk in favor of a re-test of $6,500.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Disclaimer Read More
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.
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.