Bitcoin (BTC) remains on the defensive despite a 4-percent recovery from nine-day lows today, but bearish pressure may weaken if prices rise above key resistance near $3,900.
The world’s largest cryptocurrency by market capitalization fell to $3,629 at 05:00 UTC on Bitstamp – its lowest level since Nov. 27. At press time, the price stood at $3,770, representing a 1.5 percent drop on a 24-hour basis.
Despite the quick recovery, the odds appear to be stacked in favor of a drop to recent lows below $3,500.
To start with, BTC closed below $3,711 yesterday, invalidating the short-term bullish reversal signaled by last Wednesday’s 11 percent gains. The daily close also added credence to the bearish lower high carved out near $4,400 in the last few days.
Added to that, the bearish setup on the long duration charts suggests strong potential for a deeper sell-off.
That said, a minor recovery rally could be seen if prices cross resistance at $3,882 – upper edge of the falling wedge pattern – seen in the chart below.
As seen above, BTC suffered a symmetrical triangle breakdown yesterday, signaling an end of the corrective bounce and a resumption of the sell-off.
So, the immediate outlook remains bearish as long as prices are holding below the lower edge of the symmetrical triangle pattern (former support), currently at $3,850.
BTC, however, has also established a falling wedge – a bullish reversal pattern. Therefore, the outlook as per the hourly chart would turn bullish if prices cross $3,882 (upper edge of the wedge).
The breakout, if confirmed, would open up upside toward $4,265 (Dec. 2 high) and possibly to $4,410 (Nov. 29 high).
Securing that bullish breakout, however, could prove a tough task, as the major moving averages (50-, 100-, and 200-hour) are trending south in favor of the bears.
Over on the daily chart,
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