Bitcoin’s drop from $7,870 to $7,087 (Wednesday's low) may turn out to be a bear trap due to falling selling volumes and bear exhaustion indicated on the daily chart.
A re-test of $7,870 could be in the offing – more so, as the three-day chart is still reporting a bull reversal pattern.
A UTC close above $7,870 is needed to invalidate lower-highs setup and bolster the short-term bullish case.
On the downside, $6,847 (as per Bitstamp prices) is the level to beat for the sellers.
Bitcoin has recovered from one-week lows hit earlier on Wednesday and may revisit recent highs in the short-term.
The leading cryptocurrency by market value fell to $7,087 at 08:10 UTC – the lowest level since Nov. 27, according to Bitstamp data. At press time, bitcoin has recovered to $7,220, representing an 8 percent drop from the recent high of $7,870 reached on Nov. 29.
Further, the cryptocurrency has erased nearly 50 percent of the recovery rally from the Nov. 25 low of $6,515 to $7,870.
Essentially, bitcoin has established a lower high at $7,870, signaling a continuation of the sell-off from October highs above $10,300.
Even so, sellers need to observe caution, as the latest pullback lacks volume support and may prove a bear trap, as seen in the chart below. Read More...