Following Bitcoin’s (BTC) dramatic reversal this weekend, the crypto’s weekly candle has closed looking very bullish, retaking a number of key levels and trends that were starting to look set up for quite an extensive downside trend. In short, a number of features of the Bitcoin chart were saved at the eleventh hour -- and we have the monthly close to look forward to later this week.
Starting then with the weekly: there are three important features of the chart that have been immediately reversed. First of all, the 55 EMA (purple) had previously served as very strong support during Bitcoin’s October consolidation. Late last week it was lost, but was this weekend completely retaken with price closing far, far above it.
The second item of note on this chart is the histogram. During October, the histogram had been recovering nicely, and only late last week, during last week’s big drop, did it break its developing up-arch. But after this weekend’s price action, a powerful arch up has been painted on the chart, implying an end to the previous downtrend.
The third thing to note on the weekly is the EMA fan. Seen in more detail below, the so-called ‘EMA fan’ -- the clutch of Fibonacci EMA averages, 8, 13, 21, 34, 55 -- had begun collapse in mid-September, which collapse was starting to confirm in October with the cross of the 13 and 21 averages.
But after the weekend’s action, this collapse seems to have been completely halted, with the 13 recrossing up the 21. If this trend continues -- and it seems likely -- we’ll see the 8 retake the 13 and return to a fully bullish, positive configuration; this will be a very bullish sign for a long term trend.
If we move to the daily, we see that price has broken through both of the summer consolidation levels: Both the downtrending resistance and the horizontal support, that together formed a more-or-less bearish descending triangle (this was heavily disputed).
That support is currently holding, and if it continues to hold -- anywhere above $9k -- we could see another break to the upside pretty soon within this extremely bullish atmosphere. The RSI didn’t actually even get to overbought conditions, so we can imagine a bit more fuel in the tank for upside. The histogram here is beginning to arch down however, suggesting that we may get deeper into the retracement range -- perhaps testing the 55-day EMA.
All in all, Bitcoin is looking extremely bullish. The (all-important) long term indicators have been saved from the trash bin, and the conditions are there for a long term trend reversal. Of course, there remains the possibility that this is all an elaborate bull trap, and we need confirmation of support on the present retracement. But considering the astonishing strength of the rally and the solid weekly indicators painted, it would be hard for the bears to regain control of this market.
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