Treading Water: Bitcoin Bulls Await Break Above $7,780
Bitcoin (BTC) continues to operate in bearish territory and only a move above $7,780 would put the bulls back into the driver’s seat, the technical charts indicate.
As of writing, the cryptocurrency is trading at $7,591 on Bitfinex. The cryptocurrency was on the defensive yesterday, courtesy of a failed breakout and a rising-wedge breakdown and looked set to re-test the recent low of $7,040.
However, sellers ran out of steam at $7,372, as indicated by a doji candle and prices moved back above $7,600 in the Asian session today.
While the exact reason behind the bear exhaustion is unclear, it fits with a recently observed pattern that bitcoin changes direction in favor of the weaker side on, or close to, the sixth day of every month.
The cryptocurrency is down more than 30 percent from the recent high of $9,990, meaning the bulls are on the back foot. So bitcoin could turn higher today, as indicated by the historical pattern.
Furthermore, the fear of getting trapped on the wrong side of the market may have forced the bears to stay on the sidelines, despite the false breakout and rising-wedge breakdown.
That said, the cryptocurrency is still treading waters in the bearish territory, as seen in the chart below.
The bearish rising-wedge breakdown remains valid as long as bitcoin keeps trading below $7,780 (June 3 high). So, the downside is still in play and the sell-off could accelerate if the support at $7,372 is breached.
However, the 50-candle moving average (MA) has started rising in favor of the bulls and the 100-candle MA has flatlined (shed bearish bias), so the odds of a break below $7,372 are low.
- A high volume break above $7,780 would add credence to the quirky “6th of the month” pattern and signal a bullish trend reversal. In this case, prices will likely rise to the 10-week MA, currently located at $8,310.
- A break below $7,372 would put the focus back on the rising-wedge breakdown and allow a drop to $7,040.
Hourglass image via Shutterstock