(BTC) is all set to end August with double digit-losses, but a closer look at the price action suggest better times lie ahead for the leading cryptocurrency.
Indeed, the bitcoin market has witnessed a solid two-way business this month. Sellers dominated the first half as the markets reacted to the US Securities and Exchange Commission’s (SEC) disapproval of a Winklevoss bitcoin exchange-traded fund (ETF) in late July.
However, by mid-August, the bears had run out of steam and the technical charts were calling for a corrective rally.
Accordingly, BTC picked up a bid and moved above $6,400 in the third week. Notably, the short-term bullish reversal signals gained more credence after the cryptocurrency shrugged off the SEC’s rejection of nine other ETF proposals on Aug. 22.
Further, BTC/USD short positions in the futures market hit record lows, signaling the sell-off from the record high of $20,000 set in December likely ended around the psychological support of $6,000. Consequently, the emboldened bulls pushed BTC to highs above $7,000 earlier this week.
So, while BTC is reporting a 10 percent monthly loss overall, the technical charts indicate there is a reason to be optimistic going forward.
According to a chart on Coidesk, (prices as per Bitfinex), a long wick (tail) is attached to the current monthly candle, which is widely considered a sign of trend weakness – that is, the bears failed in their attempt to push prices back to the June low of $5,755 and the bulls regained some lost ground.
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Further, the bears have failed three times in the last 10 weeks to keep the cryptocurrency below the support at $6,000. So, it seems safe to say the cryptocurrency has likely charted a long-term bottom around $6,000 and hence prices could revisit July highs above $8,500 in the next month or two.
– Bitcoin’s long-tailed monthly candle indicates the long-term bear market likely bottomed out around $6,000.
– A break above the July high of $8,507 would confirm a bullish reversal.
– A monthly close below $6,000 (major support) would signal a revival of the sell-off from the December high of $20,000.