Bitcoin's Price Bounces Back After Sudden Sell-Off
This seems like a good sign.
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The market is attempting to stage a recovery during Wednesday’s U.S. session, following another heavy crypto sell-off earlier this morning.
Almost the entire top 10 plunged to fresh multi-month trading lows before partially bouncing back. Litecoin notably recovered almost all losses, after falling to its lowest level since February 11th, around the $36.00 level.
BTC/USD briefly fell under the November monthly trading low, hitting $6,400 on certain exchanges before correcting. Bitcoin is currently trading around $6,800.
The total cryptocurrency market capitalization recovered from $166 billion this morning, and is currently $178 billion as measured by TradingView.
Technical weakness below the $6,550 level prompted a minor technical sell-off in BTC/USD earlier, although a recovery has since taken place.
BTC/USD does appear overextended from a technical perspective and could start to stage a stronger recovery than we are currently seeing. The RSI on the daily time frame is in oversold territory.
While the broader trend is still heavily bearish, repeated failure to break under the $6,550 level could lead to a strong recovery.
Former support now becomes resistance, with the $7,070 and $7,380 levels acting as possible recovery areas above the $6,850 level.
Litecoin bounced from major technical support this morning, leading to a recovery in the LTC/USD pair towards the $40.00 level.
From a technical perspective, the cryptocurrency has been extremely weak for many months, pointing to $36.00 as a downside target for some time. This morning that level was hit and a price recovery followed, unlocking the potential for a decent relief rally.
Traders that are bullish on LTC/USD over the long-term may have entered from the $36.00 level. With this in mind, a counter rally is possible as long as the support holds. A rebound back towards trendline resistance, around the $50.00 level, is certainly possible.
According to the latest data from The TIE, sentiment toward the cryptocurrency market is neutral at 50 percent.
EOS has the strongest sentiment among the top 10 at 67 percent. Meanwhile, Bitcoin has the weakest at 25 percent.