Bitcoin's drop from $7,870 to $7,087 may turn out to be a bear trap due to falling selling volumes and bear exhaustion indicated on the daily chart.
Bitcoin has recovered from one-week lows hit earlier on Wednesday and may revisit recent highs in the short-term.
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.
Sellers need to observe caution, as the latest pullback lacks volume support and may prove a bear trap, as seen in the chart below.
Bitcoin dived below an ascending trendline on Dec. 1, signaling an end to the corrective bounce.
Bitcoin is currently reporting its fifth red daily candle in a row.
The chart also shows a steady decline in selling volumes since Nov. 30.Hence, bitcoin may soon pick up a bid and challenge $7,550 - the resistance of the trendline connecting the Oct. 26 and Nov. 15 highs - and possibly extend gains to $7,870.
A UTC close above the latter level would invalidate the lower-highs set up and confirm a bullish reversal on the daily chart.
It's worth noting that the cryptocurrency has already charted a bullish hammer reversal pattern on the three-day chart.
Bear Trap? Bitcoin Slips to One-Week Low Amid Low Volumes
Published on Dec 4, 2019
by Coindesk | Published on Coinage
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