Having eased from eight-day highs, bitcoin (BTC) price could be in for a minor bout of consolidation, before further upside unfolds.
The cryptocurrency rose to $6,596 earlier today on Bitfinex – the highest level since Sep. 6 – adding credence to the short-term bullish reversal signaled by the symmetrical triangle breakout earlier this week.
However, despite the strengthening bullish case, the corrective rally has stalled. At press time, BTC is changing hands at $6,450, having printed an intraday low of $6,355 a few minutes ago.
While the sudden price pullback could force investors to question the sustainability of the corrective rally, the short-term technical charts continue to show that the path of least resistance is on the higher side.
Hourly chart
BTC's retreat from the highs near $6,600 is likely associated with the bearish divergence of the relative strength index seen in the hourly chart.
Indeed, the RSI has adopted a bearish bias, still, it is premature to call an end of the technical recovery, as the major moving averages (MAs) – 50-hour, 100-hour, and 200-hour – are trending north in favor of the bulls.
More importantly, the key MAs are capping the downside as of writing. This leaves scope intact for a recovery to resistance at $6,800 (multiple daily highs).
Daily chart
Over on the daily chart, BTC closed (as per UTC) above the 10-day MA yesterday, neutralizing the bearish view put forward by the rising wedge breakdown on Sep. 5.
However, the short-term MA is still sloping downwards. This, coupled with the bearish RSI divergence on the hourly chart could keep the cryptocurrency range bound for the next 24 hours or so.
That argument has merit as the technical recovery usually gathers speed after short-term MAs bottom out – unless of course there is a major positive fundamental news.
View
BTC has retreated from eight-day highs, but the technical recovery is still intact. The cryptocurrency could consolidate around $6,400 in the next few hours before resuming the journey towards $6,800. A UTC close below the trendline connecting the June low and Aug. 11 low would put the focus back on the rising wedge breakdown witnessed earlier this month and could yield a drop below $6,000 (February low).Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; Charts by Trading View
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