Bitcoin back above $40,000 following a brief correction
Bitcoin price opened this week’s trading session with bearish strength hitting the $38,500 mark. The bulls then regained control to bring the price back above $40,000 USD. If the price closes above $40,400, it might signal a buy signal.
- Bitcoin price action has printed bearish engulfing candles on the H4 chart.
- The bulls are attempting a rally following this morning’s strong sell off.
- The invalidation of the bearish thesis is a daily close above $40,400 USD.
Has Bitcoin found its price floor?
Bitcoin price disappointed the bulls this morning breaking through the support level at $40,000 USD over the weekend. Bitcoin is currently trading near $40,600 USD. The price level might encourage first-time buyers to get involved. However, there are several bearish signals to take into account before confirming a real bullish recovery.
Bitcoin offers mixed signals, but an average dollar price approach might benefit Bitcoin buyers in the long term. Last Friday’s thesis mentioned that the bears may have gained momentum following a large bearish engulfing candle established on the 8-hour chart.
Now the bears have matched the first show of strength with added power as price printed another bearish engulfing candle on the 4-hour chart, wiping out all the price action from the weekend.
Bitcoin (BTC/USD) 4 hour chart
The Relative Strength Index (RSI) has printed a bullish divergence, however, it is not in buyers’ territory on the 4-hour chart. The bullish price action following the sell off has nothing to offer traders who are catching knives, as the price has barely moved.
The $39,500 USD level might be a good place for a long-term investor to place an offer, but professional traders are unlikely to qualify Bitcoin price as the floor price. Traders will likely be looking for a drop to $36,000 USD, where more liquidity has been since the March bull run.
The invalidation of the bearish thesis is a close above $40,400 USD. If the bulls can reestablish the price action in the previous consolidation zone, they may have a chance to conquer the downtrend. If so, the price of Bitcoin might rally towards $44,000USD, which would lead to a 15% increase from the current Bitcoin price.
By FXStreet
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Forex Quebec. Every investment and trading move involves risk, you should do your own research when making a decision.
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