Bitcoin (BTC) is again trading above $6,000 and looking up, but today’s closing price will likely set the tone for the rest of the week.
The leading cryptocurrency fell to $5,755 at 15:00 UTC on Sunday – the lowest level since Nov. 12 – only to make a quick recovery back above $6,000 an hour later, according to Bitfinex data.
The failure to capitalize on the drop, despite the long-run bearish technical setup, suggests that the bears are feeling exhausted, having pushed BTC lower by more than 40 percent (from $9,990 to $6,000) in the last seven weeks.
So, a relief rally may be in the offing, but that depends on whether prices close today (as per UTC) on a positive note.
At press time, BTC is changing hands at $6,150 – up 4.5 percent on a 24-hour basis.
BTC created a doji candle on Sunday, normally signaling indecision in the marketplace. However, when viewed against the backdrop of a 40 percent decline from May high of $9,990, Sunday’s doji candle likely represents bearish exhaustion.
A notable relief rally could be in the offing if BTC closes today (as per UTC) above $6,250 (Sunday’s doji candle high), confirming a bullish doji reversal.
Further, the relative strength index (RSI) has begun to diverge in favor of the bulls: creating a higher low despite a lower low in price. So, a positive price action today would also confirm a bullish divergence there…