- Bitcoin’s hunt for a bottom is seeing light at the end of the tunnel.
- The falling wedge pattern reaction will reverse the downtrend with the target set above $10,000.
Bitcoin is gradually approaching the of the month-long correction exercise. The previous breakout saw BTC skyrocket above $10,000. The recovery from $7,300 in October was unexpected. However, its momentum was significant enough to touch the area around $10,569. Unfortunately, the buyers lacked the strength to sustain the gains which left a gap for the bears to explore. The reversal sent Bitcoin towards $9,000. A further downside correction witnessed last week refreshed levels heading to $8,000.
Meanwhile, Bitcoin is trading at $8,474 after posting modest gains from the November low around $8,348. The price is still trading below the moving averages on the 4-hour chart. Besides, with the 50 MA below the 100 SMA, downward correction is likely to last longer.
BTC/USD 4-hour chart
What is apparent is that Bitcoin is closing in on a possible bottom. The hunt for a bottom coupled with a reaction to the perfectly forming falling wedge pattern is the perfect ingredient for a recovery towards $9,000 and $10,000. Besides, the end of the year rally could boost Bitcoin above the hurdle at $10,400.
In the short-term, the technical picture will remain to be negative. The Relative Strength Index is below the average and grinding towards the oversold. In spite of the lower correction, it is yet to be oversold from both the near term and the long term perspectives.
The best the bulls can do is to ensure that the support at $8,250 is defended at all costs. At the same time, pulling above $8,800 will increase the bulls’ confidence in the recovery towards $10,000.
Bitcoin Key Technical Levels
BitMEX Index price: $8,477
Volume: $1.5 billion
Open interest: 845 million
Trend: Bearish short-term but bullish in the long term
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Source: Coin Gape