The stagnant bitcoin charts could spring back to life in the next 24 hours, with a bullish move possibly on the cards.
The cryptocurrency has been moving in a more or less sideways manner for over a week now and – currently trading at $6,848 on Bitfinex – is largely unchanged on a 24-hour basis.
However, the price range continues to narrow on a daily basis (as seen on the chart below) and a breakout appears to be imminent.
The above chart (prices as per Bitfinex) shows:
- Falling wedge, a bullish reversal pattern, meaning an upside break would confirm the tide has turned in favor of the bulls.
- Pennant formation, a bearish continuation pattern, characterized by lower price highs and higher price lows. A downside break would indicate resumption of the sell-off from $9,050 (March 24 high).
So, there are conflicting patterns on the daily chart. That said, the failure on the part of the bears to capitalize on the recent bearish outside-day candle could be an indication of an impending rally.
BTC suffered a high volume drop from $7,189 to $6,611 on April 9 (bearish outside-day), engulfing the previous day’s price action.
However, the follow-through in the next two trading days has not been encouraging for the bears, given that bitcoin moved back well above $6,611.
The bear’s weakness, when viewed against the backdrop of the basing pattern along the ascending 50-week moving average (MA), suggests there is scope for a minor rally.
The previous two weekly candles show bitcoin’s dip below the rising (bullish) 50-week MA was short-lived.
As mentioned, BTC hit a low of $6,611 on April 9 and is now trading above the 50-week MA of $6,791. So, a base may have formed along the key moving average support.
The technical set-up also adds credence to historical evidence that bitcoin tends to put on a good show in April every year.
BTC will likely break through $7,100, confirming a falling wedge reversal (bull reversal) and move towards the resistance lined up at $7,510 (April 3 high) in the next 24 hours.
The odds of a bearish revival would rise if the cryptocurrency finds acceptance below $6,600. Such a move would signal downside break of the pennant pattern, thus opening the doors to $6,425.