Bitcoin Price Recovers 85% of Recent Losses With Move Above $13K
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- BTC continues to chart bullish higher lows and higher highs on short duration charts, favoring a retest of the recent high of $13,880.
- A move to $13,880 may take time if prices drop below key support at $12,538. That would allow a deeper pullback to $12,000.
- A high-volume UTC close below $12,000 would invalidate the short-term bullish setup, although that looks unlikely.
Bitcoin (BTC) bolstered its already bullish technical setup with a move above $13,000 earlier today.
The top cryptocurrency by market capitalization rose to $13,154 in the Asian trading hours, the highest level since June 27, according to Bitstamp data.
With the move to two-week highs, BTC has recovered 85 percent of the sell-off from $13,880 to $9,614 seen in seven days to July 2.
Further, with the uptick in prices, bitcoin’s dominance rate – the leading cryptocurrency’s share of the total market – has jumped to a fresh 27-month high of 65 percent, according to data source CoinMarketCap.
As a result, the rally looks sustainable and the cryptocurrency appears on track to challenge the year-to-date high of $13,880 hit on June 26.
As of writing, the cryptocurrency is trading at $13,000 on Bitstamp, representing 4 percent gains on the day.
Hourly and 15-minute charts
Bitcoin rallied 2.4 percent to $12,873 in 60 minutes earlier today, confirming an upside break of the symmetrical triangle – a bullish continuation pattern – on the hourly chart (above left).
With a move above the resistance at $12,883 (horizontal line), BTC also established a fresh higher high.
Therefore, the path of least resistance is on the higher side – more so, as prices reinforced the bullish breakout with a successful defense of the former hurdle-turned-support of $12,883 at 07:15 UTC.
The 15-minute chart is reporting a bull flag breakout, a continuation pattern which often accelerates the preceding uptrend. The breakout has created room for a rally to $13,868 (target calculated by adding the pole height of $878 to the breakout price of $12,990).
The rise to the recent high of $13,880, however, may not happen in the U.S. trading hours if the cryptocurrency weakens the immediate bullish case with a move below $12,538.
Daily and weekly charts
Bitcoin closed above well above $12,061 yesterday (above left), invalidating the bearish lower high created on June 28. The 5- and 10-day moving averages (MAs) are again trending north, indicating a bullish setup.
The 14-day relative strength index (RSI) is reporting bullish conditions with an above 50 print, and the Chaikin money flow indicator is holding well into the positive territory, indicating sustained buying pressure.
All-in-all, BTC appears on track to test and possibly break above the June 26 high of $13,880.
It is worth noting that the 14-week relative strength index (above right) is currently hovering at the highest level since December 2017, meaning BTC is most overbought in 19 months.
That, however, should not be a cause for concern for the bulls. After all, BTC’s quick recovery from sub-$10,000 levels has invalidated the bearish exhaustion indicated on the charts in the last week of June.
As the old saying goes, an overbought market can remain overbought longer than sellers can stay solvent. Indicators tend to stay overbought for a prolonged period in a strongly trending market.
Disclosure: The author holds no cryptocurrency at the time of writing
Bitcoin image via Shutterstock; charts by TradingView
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Omkar Godbole, Khareem Sudlow