Having tested $11,000 this morning, bitcoin (BTC) is now trading roughly sideways for the month, but could still enter March on a positive note.
CoinDesk’s Bitcoin Price Index (BPI) clocked a seven-day high of $11,044 at 06:30 UTC and was last seen around $10,610. Due to the retreat from the intra-day high, the cryptocurrency is now trading largely unchanged on a 24-hour basis, according to data source CoinMarketCap.
With BTC closing last month at $10,221, the cryptocurrency is on track to close the current month with only marginal gains, unless the bulls make progress.
In context, though, the performance is impressive if we take into account the fact that bitcoin had dropped to three-month lows below $6,000 on Feb. 6. However, the “V”-shaped recovery looks to have run out of steam around the $11,000 mark for the second time in seven days.
Further, daily trading volume has averaged around $7.73 billion from Feb. 7 to date, compared to a January average of $13.42 billion, as per CoinMarketCap. The drop in the daily average trading volume during the recovery period could be an indication of a lack of confidence among investors about the sustainability of the corrective rally.
That said, volumes will likely rise if BTC sees longer-term bullish reversal via a break above the confluence of the inverse head-and-shoulders neckline and the descending trendline resistance.
Daily chart
- The descending trendline is seen converging with the neckline resistance at $11,660 by Sunday.
- A daily close (as per UTC) above the same would confirm a bearish-to-bullish trend change and open doors for a rally to $17,400.
Meanwhile, the odds of the pair completing the inverse head-and-shoulders pattern would drop if bitcoin closes (as per UTC) below the downward sloping (bearish biased) 50-day MA, currently seen at $10,512.
Moreover, the pullback from the intra-day highs above $11,000 could be attributed to the bearish price-relative strength index (RSI) divergence seen on the hourly chart below.
1-hour chart
The above chart (prices as per Bitfinex) also shows a bullish 50-hour MA, 100-hour MA crossover and a bullish 50-hour MA and 200-hour MA crossover. So, despite the bearish price RSI divergence, the downside will likely be capped around the upward sloping 50-hour MA.
View
- A rebound from the 50-hour MA and a break above $11,065 (intra-day high) could yield a rally to the 10-week MA of $11,366. A violation there would expose the inverse head-and-shoulders neckline resistance and the trendline resistance seen today around $11,675 and $11,825, respectively.
- A close today below the downward sloping 50-day MA of $10,512 would allow a re-test of the Feb. 25 low of $9,280.
- Meanwhile, a break below $9,280.4 would signal the corrective rally from the Feb. 6 lows below $6,000 has ended and would open up downside towards the $6,000 mark.
Weights image via Shutterstock