- Bitcoin created a bullish “engulfing candle” last month, confirming seller exhaustion. A bullish reversal, however, would only be confirmed if price closes above $4,190 (high of the engulfing candle) on March 31.
- A bullish monthly close would open the doors to $5,000, although gains may be hampered by the crucial 21-week moving average, which is still trending south.
- The prospect of a bullish monthly close above $4,190 would drop sharply if prices find acceptance under the 30-day moving average, currently at $3,900. That average line has served as strong support at least three times this month.
Bitcoin now has a high price target if it is to see a bullish reversal this month, price charts suggest.
The leading cryptocurrency jumped more than 10 percent in February, snapping the record six-month losing streak. More importantly, the recovery rally seen in February engulfed the price action seen in the preceding month.
Essentially, BTC created a bullish engulfing candle on the monthly chart following an 80 percent drop from the record high of $20,000 reached in December 2017. While that pattern is widely considered an early warning of potential bullish reversal, traders usually wait for more credible signs of a trend change, preferably a close above the candle’s high.
Put simply, a long-term bearish-to-bullish trend change would be confirmed if prices close (UTC) above the February high of $4,190 on March 31. That would also reinforce the bearish-to-bullish trend change signaled by several longer duration indicators over the last few weeks.
As of writing, BTC is changing hands at around $4,000 on Bitstamp, representing a 0.4 percent rise on a 24-hour basis.
BTC clocked a high of $4,190 and created a bullish engulfing candle last month – likely a sign of bargain hunting following a prolonged sell-off. So far, the follow-through has been positive, confirming the bear exhaustion.
A UTC close above $4,190 on March 31 would confirm a longer-term bullish reversal and open the doors to the psychological hurdle of $5,000.
A failure to close above that key level would weaken the bullish case and could increase selling pressure.
Daily and 4-hour charts
On the daily chart, BTC bounced up from the 30-day moving average (MA) earlier this week, invalidating Monday’s bearish close below $3,920.
However, the case for a monthly close above$4,190 would strengthen if prices establish a higher high above the March 21 high of $4,055 in the next 48 hours. That would also confirm a bull flag breakout on the 4-hour chart – a continuation pattern which often accelerates the preceding bullish move.
On the downside, the 30-day MA, currently at $3,900, is the level to beat for the bears.
Disclosure: The author holds no cryptocurrency assets at the time of writing.