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Bitcoin (BTC) is becoming increasingly bullish on a key technical chart after its strong move above $ 4000.
The main cryptocurrency for market value has primarily triggered a bullish reversal on December 17 with the creation of a candle "external overthrow" on the widely followed 3-day chart. The early indicator of a downward to bearish change, however, needed confirmation in the form of a positive follow-through.
Next to the $ 600 BTC rally, the cryptocurrency closed yesterday above $ 4,000 confirming the bullish reversal on the 3-day chart.
BTC, therefore, could rise to the next major resistance of $ 4,400 in the short term.
At the time of writing, the cryptocurrency is trading at $ 4000 on Bitstamp, largely unchanged on a 24-hour basis.
3 day chart
The confirmation of the change from bearish to bearish trend can be seen on the three-day chart above, where the last candle ended well above $ 3,590 – the maximum of Monday's inversion candle.
The addition of credibility to that positive trend change is BTC's move above the exponential 10-candle (EMA) average yesterday.
In addition, the relative strength index (RSI) has jumped underground, validating a bullish divergence created on December 15th.
Daily chart
On the daily chart, the BTC created a "Gravestone doji" candle on Wednesday – widely considered an early bear reversal signal. The recovery rally from the 15-month lows close to $ 3,100 would probably have ended if BTC had closed yesterday under $ 3,642 (Wednesday's low).
The cryptocurrency, however, closed well above $ 3,924 (maximum of gravestones doji), reinforcing the bullish view advanced by the convincing closing of Tuesday above $ 3.63.
Also other technical studies are tendentious towards the bulls. For example, 5-day and 10-day EMAs are trending north, and 14-day RSI takes well past 50.00.
view
- A bullish reversal is confirmed on the three-day chart.
- BTC could extend the ongoing rally to $ 4,400 in the coming days.
- A daily close below $ 3,633 would reverse the bullish asset, although the likelihood of a short-term bearish approach is low.
Revelation: The author does not hold cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; graphics of Trading View
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