The sell-off in the bitcoin-US dollar exchange rate (BTC/USD) appears to have stalled, with prices trading at $3,550 at press time.
Over the course of a volatile day, the cryptocurrency fell to a low of $2,980 oversold technical conditions came into play, as we discussed early today.
As per CoinMarketCap, the digital currency has lost 2% over the last 24 hours.
Bitcoin may have found a short-term bottom
The previous article had talked about a potential bullish price RSI divergence on the 4-hour chart. Well, the 4-hour chart is yet to confirm the bullish divergence, however, it has been confirmed on the 1-hour chart.
The chart above shows the bullish price RSI divergence (lower lows on the price chart and higher lows on the RSI).
The bullish pattern on the 1-hour chart indicates that bitcoin sell-off has run out of steam for now. Prices could test $3,550-3,600, which is the resistance offered by the downward sloping trend line.
Avoid being over ambitious
The bullish setup on the 1-hour chart is valid for a couple of hours. Bitcoin is unlikely to see significant gains above $3,550-3,600 as the Stochastics is close to being overbought.
Watch out for a bullish divergence on the 4-hour chart
The argument that bitcoin has found a short-term bottom at $2,980 would gain more credence if the bullish-price RSI divergence is confirmed on the 4-hour chart.
Bitcoin is likely to consolidate largely in the range of $3,100 to $3,600. Markets seem to have priced-in the bearish news out of China. Unless there is more damaging news out of China, the range is not likely to be breached to the downside.