Bitcoin bulls were left scratching their heads as the world’s largest cryptocurrency fell back to lows of $9,855 today. However, according to technical analysis, the pullback looks set to be no more than a temporary duck as the market prepares for another significant Bitcoin rally.
Described widely as a “bear trap”, the slide on Wednesday was coupled with a decrease in selling volumes, indicating seller-side exhaustion. This, combined with positive indicators suggesting an emerging bull trend has led some analysts to conclude another rally is around the corner.
The news comes after a couple of weeks of ranging bitcoin prices, with neither bulls nor bears getting a grip of the direction of travel. For some analysts, this in itself is a positive indicator for medium-term prospects, with BTC traditionally rallying in Q3.
A Bull Wave Coming?
Coindesk analyst Omkar Godbole said Bitcoin could stream above $10,270, which would confirm the emergence of the next bull wave.
Bitcoin’s drop from $10,949 to $9,855 (Wednesday low) may be a bear trap, as selling volumes have dropped. A widely-tracked 4-hour chart indicator is reporting a bullish divergence. Meanwhile, the daily candlesticks are signaling seller exhaustion. BTC could rise above $10,270, confirming a falling wedge breakout on the 4-hour chart.”
Describing the chance of a further decline as “unlikely”, Godbole said there was now a clear route to $10,956. Furthermore, that would take prices back towards the highs of August 20.
On the downside, a heavy drop below $9,855 would signal a more established bearish trend, which could take prices back do3n towards $9,500.
“A wedge breakout, if confirmed, would open the doors to $10,956 (Aug. 20 high). A UTC close above that level would confirm bull revival. On the lower side, a high-volume drop below $9,855 could pave the way for a deeper drop toward $9,500. Currently, that looks unlikely.”
At the time of writing, bitcoin was trading at $10,017. Moreover, all indicators are pointing to a revival around the corner. For bitcoin bulls, it’s a question of timing the next rally to take full advantage of the swing.