$6,000?: Bitcoin Nears Next Roadblock After Price Stages Sharp Recovery
After a period of healthy consolidation, the BTC/USD exchange rate seems to finally be regaining momentum and heading northward.
After experiencing a bit of over-bought volume and climbing to a high of almost $5,900, Bitcoin finally cooled off yesterday, as it retraced back to a two-week low of nearly $5,200.
However, following this shortly-lived correction was an immediate 10% rebound ($5,200 to over $5,700), indicating a huge demand and strong floor of support for Bitcoin around its dipped price level.
At press time, Bitcoin is sitting near its all-time high around $5,700. According to coinmarketcap.com, the cryptocurrency has gained over 7% in the last 24 hours, and is up 5% this week. On a monthly basis, the BTC/USD exchange rate is still holding a 45% gain.
On a fundamental note, the BTC correction experienced yesterday seems to be a healthy consolidation of over-bought volume, and the subsequent “V” shaped recovery could be taken as a signal that cash continues to remain on the sidelines for a good buy opportunity.
In addition, the potential benefits of holding Bitcoin ahead of its tech upgrade and network hard-fork on October 25th could also bring in more buyers, leading to higher prices.
Nonetheless, while Bitcoin’s price did have a substantial correction, over-bought signals continue to persist.
Lets take a look at some technical indicators.
The above chart is showing a few different things:
- Yesterday’s (Wednesday’s) candlestick was a “Dragonfly Doji”
- The relative strength index (normal and stochastic) are still over-bought.
- Higher lows pattern (and uptrend) is still intact.
What does this mean?
Well, a few things. First off, a Dragonfly Doji is a candlestick pattern with a long tail, also known as ‘wick’, without a real body or upper shadow. This long downward tail indicates dip demand, while the Dragonfly Doji itself represents indecision among traders.
In this case, the price action on the following day of the doji indicator usually determines the markets short-term outlook. Therefore, the fact that Bitcoin experienced upward momentum after its correction is an encouraging signal: $6,000 may soon be a crossed milestone if the bid tone remains bullishly intact over the next few hours.
On the other hand, however, negative price action and a lower closing point toward the end of the day would most likely confirm a bearish reversal. If the BTC/USD exchange rate falls below its previous all-time high and upward trend line around $5,000, a bullish-to-bearish trend would be confirmed and contnued neagtive momentum would be evident.
Therefore, if BTC can sustain its current bullish tone and hurdle over its next major roadblock around the $6,000 level, continued upward momentum could safely be expected.
And with hype surrounding BTC’s next hard-fork still underway, achieving this milestone should be nothing more than mere breeze.
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