Pullback on the Cards? Bitcoin Finds Weak Hands Above $10K
Having found weak hands above the $10,200 mark in Asian hours, bitcoin has slipped back into four figures.
The cryptocurrency rose above $10,000 at 17:29 UTC yesterday, but ran into offers at $10,218 and dropped to $9,865.29 at 21:59 UTC. Another attempt to score gains above the $10,000 mark ran out of steam at a high of $10,293.44 at 02:14 UTC. As of writing, CoinDesk’s Bitcoin Price Index (BPI) is seen at $9,960.
Despite the pullback from a 16-day high of $10,293.44, the cryptocurrency is still up 1.56 percent on a 24-hour basis, according to data source CoinMarketCap.
On Bifinex (the biggest exchange by volume), trading volumes surged as BTC rose above $10,000 yesterday. However, as seen in the chart below, the volumes have dropped in the subsequent hours, explaining the failure to post solid gains above $10,000.
Also, as discussed earlier this week, the weekly chart remains bearish, thus a struggle to hold above $10,000 should not come as a surprise. Further, the shorter-duration technical charts indicate scope for a further drop towards $9,000.
The above chart (prices as per Coinbase) shows:
- Bearish price-relative strength index (RSI) divergence, marked by higher highs on prices and lower highs, and signals the short-term bullish-to-bearish trend change.
- Rounding top on the RSI, indicating the rally from the Feb. 11 low of $7,857.78 may have found a temporary top above $10,000.
- The 1-hour 50-MA is curled up in favor of the bulls.
- Strong support at $9,090 (confluence of the ascending trendline and the Feb. 10 high).
- BTC looks could revisit $9,000 in the next few hours as suggested by the topping pattern on 1-hour chart.
- Bullish scenario: A rebound from $9,000 would keep bitcoin in the hunt for $11,000 (inverse head-and-shoulders target), although only a high volume break above $11,300 would revive the bullish outlook.
- Bearish scenario: A daily close (as per UTC) below $9,000 would add credence to the bearish weekly chart and the potential for a stronger retreat to $7,851 (Feb. 11 low).
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase.
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.