BTC ignoring oversold conditions
Bitcoin is the leading crypto by market value, and it was trading almost $3,200 two days ago, representing an 83% drop from the record high of $20,000 which was reached on the same date last year.
But, BTC, which was ignoring extreme oversold conditions for weeks, and also struggling to pick up a bid, has suddenly jumped to an eight-day high of $3,590 from around 12:00 UTC. Recently, two days ago, the crypto was changing hands at $3,450 on Bitstamp.
With that bounce, BTC has not only validated the oversold readings on the 14-week relative strength index or RSI, but it has also established a bullish reversal pattern on the widely followed three-day chart.
BTC created a bullish outside reversal candle
Bitcoin also formed a bullish outdoor reversal candle which means that the price action that was seen during the three days to the 17th of December engulfed the three-day candle high and low from previously.
The candlestick pattern actually suggests that the period started pessimistically, but it ended on a positive note. Also, it is widely considered as an early sign of bullish reversal, particularly when the pattern appears at the bottom of the downtrend.
However, a bearish-to-bullish trend change would just be confirmed if the current three-day candle ends above $3,590 high of the bullish outside candle.
The possibility of BTC to rise above $3,590
Moreover, the relative strength index or RSI created a bullish divergence or higher low in oversold territory below 30.00. Trading volumes also have dropped in the last several weeks, two or more, signaling that sellers have run out of steam.
Because of all that, Bitcoin seems probable to rise well above $3,590 ahead of the close of today.
Bitcoin closed on the daily chart on Monday at $3,596, confirming both a falling wedge breakout, which is a bullish reversal pattern and a bullish divergence of the 14-day RSI.
The 5 and 10 days EMAs or exponential moving averages were also bottomed out.
Hence, Bitcoin could attack the lower high of $3,633 from recently in the following several days and extend gains toward $4,000.
Bullish indicators on both the 3-day and also daily charts probably indicate that the tide has turned away the bears at least for some short time.
Bitcoin looks prepared to cross the resistance at $3,633, a high from the 9th of December, and could rise toward the psychological hurdle of $4,000 in the following few days.
The short-lasting bullish setup is going to be invalidated if Bitcoin finds acceptance below the low of $3,181 from Monday.