Bitcoin has shown initial signs of a bull market reversal following a six-month downtrend that has seen the world’s largest cryptocurrency decline from $14,000 to as low as $6,400.
Consistent lower highs coupled with dwindling volume and open interest has culminated in bearish phases across all major cryptocurrencies, with several coins losing more than 60% in value.
Bitcoin flirted with the possibility of a major breakdown in price at the start of the week, with the $6,400 level of support being tested before a ferocious rally back towards the $7,150 region.
The most important hurdle for Bitcoin to clear is the 22 exponential moving average (EMA) on the daily chart. This EMA has been halting price action since November 11, with Bitcoin failing to trade above it on numerous occasions.
The 22 EMA held strong once again following Bitcoin’s most recent rally this week, with BTC failing to close a daily candle above the critical level.
If Bitcoin can break above the 22 EMA and the $7,350 level of resistance over the Christmas week, it will likely move up towards the $7,900 level before testing the confluence of last month’s death cross, which is at $8,650.
Despite attracting criticism for failing to break its all-time high in June, Bitcoin is still more than 100% up from this time last year, and a bullish reversal over the coming weeks could well see a rally back above $10,000.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.