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Bitcoin’s buyers have been ardently defending the cryptocurrency’s newfound position within the $7,000 region, as it appears that selling pressure has been ramping up in the time following BTC’s surge from lows of $6,400.
Although the bounce at this level was certainly a bullish sign, it is important to note that the momentum that resulted from this rally has faltered, which is leading some analysts to question the long-term significance of this movement.
Bitcoin Still Hasn’t Confirmed Bullish Trend Reversal Despite Recent Pump
At the time of writing, Bitcoin is trading up just under 1% at its current price of $7,200, which marks a slight climb from its daily lows of just under $7,100 that were set yesterday as bears attempted to push the cryptocurrency back to its key support at $7,000.
BTC is trading down significantly from its recent highs of $7,600 that were set at the peak of the recent relief rally, which sent the crypto from lows of $6,400 to highs of $7,600, which is where it found significant selling pressure that halted its rally and led it to retrace to its current price levels.
While looking at its price action over a multi-week period, it does appear that Bitcoin could be close to confirming a bullish double bottom pattern, but there are some key levels that it needs to break above in order for this pattern to be confirmed.
The Wolf of All Streets – a popular cryptocurrency analyst on Twitter – spoke about these prices in a recent tweet, noting that how BTC responds to these levels could offer significant insight into where the markets go next.
“$BTC: A break of the blue line would confirm a double bottom. The red line is still resistance – price is still making lower highs and lower lows for now. Move up the other day irrelevant for the moment. The black line is key support. Basically ranging between blue and black,” he said while pointing to the chart seen below.
A break of the blue line would confirm a double bottom. The red line is still resistance – price is still making lower highs and lower lows for now. Move up the other day irrelevant for the moment. The black line is key support. Basically ranging between blue and black. pic.twitter.com/YyvnjNWEfP
— The Wolf Of All Streets (@scottmelker) December 20, 2019
Be Wary: Hidden Bearish Divergences Could Thwart BTC’s Momentum
The Wolf of All Streets also noted in a tweet that Bitcoin is currently showing some signs of bearish divergence, which could signal that further downside is imminent.
“Tread lightly. That amazing bull div on the daily has been followed by hidden bear divs. The rally from a few days ago still looks more like relief than reversal for now. Mixed TA depending on the timeframe. Real potential bullishness starts above $7,800 or so,” he noted.
Tread lightly. That amazing bull div on the daily has been followed by hidden bear divs. The rally from a few days ago still looks more like relief than reversal for now. Mixed TA depending on the timeframe. Real potential bullishness starts above $7,800 or so. pic.twitter.com/MPWm6cb2Oa
— The Wolf Of All Streets (@scottmelker) December 20, 2019
The coming few days and hours will likely provide significant insight into the long-term importance of this latest relief rally, as a failure to extend its recently incurred momentum could mean that further losses are imminent.
Featured image from Shutterstock.
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