Following Tuesday, August 11th, downward price action that saw Bitcoin hit an intraday low of $11,127, it appeared that the selling pressure was going to spill over the next day. Indeed, the flagship cryptocurrency opened Wednesday, August 12th, at $11,392.64 and immediately began trending down. For the next six hours after the daily open, BTC took a 22% nosedive to reach $11,140.
When considering the swing low of the previous day, it seemed like Bitcoin was forming a double bottom pattern, based on its hourly chart. Traders who saw this technical reversal formation seem to have rushed to long the BTC/USD trading pair. The spike in demand around this support level was significant enough to push prices back up, confirming the “W” pattern.
As a result, the pioneer cryptocurrency shot up by 4.4% to hit an intraday high of $11,630 by 15:00. Such resistance level was met with a considerable number of sell orders from those who were trying to realize profits from the upswing. The mounting downward pressure caused prices to pull back before the uptrend resumed.
By 17:00 UTC, Bitcoin had retraced 1.35% and was hovering around the $11,470 support level. Given the strength of this price hurdle, BTC turned around and recovered some of the losses incurred. Prices were able to close the day at $11,568.37, with the bellwether cryptocurrency providing investors a daily return of 1.54%.
Ethereum Rebounds Sharply From Crucial Support Level
Like Bitcoin, the smart contracts giant also kicked off Wednesday’s session on a negative posture. Ethereum opened August 12th at a high of $379.34, and quickly prices started to drop. By 6:00 UTC, Ether had reached a low of $366.05, representing a 3.50% downswing from the daily open.
Regardless, the bulls seemed to have stepped in around this price level as ETH bounced back sharply. The second-largest cryptocurrency by market cap entered one of the most significant uptrends seen since the beginning of the week. Its price surged by 6.47% to an intraday high of $389.75.
By 20:00 UTC, it was clear that some investors were going to take profits after such an impressive rally eventually. As sell orders began to pile up in substantial amounts, Ethereum took a 1.78% nosedive a few hours before the end of the day. ETH then hit a low of $383.81 while sidelined investors were trying to get back into the market.
The spike in demand seen around this price level pushed prices back. Ethereum entered a new uptrend just two hours before the daily close that saw it rise by 1.23%. ETH was able to close the day at $387.51, providing investors a daily return of 2.15%.
Key Technical Index Flashes Sell Signals
Despite the upward price action seen on Wednesday, August 12th, things are not looking good from a macro-perspective. On Bitcoin and Ethereum's 3-day chart, for instance, the Tom Demark (TD) Sequential indicator presented a sell signal in the form of a green line candlestick. Following the bull rally that began in early July, combined with the recent rejection from the overhead resistance, it is very likely that the bearish formation will be validated.
If so, BTC and ETH may be poised to retrace for one to four three-day candlesticks before their respective uptrends resume. On their way down, the flagship cryptocurrency could find support around the $10,000 support level while the smart contracts giant would likely pull back towards $300. Sidelined investors might take advantage of an eventual correction to get back into the market.
It is worth mentioning that there is one way in which such a pessimistic scenario can be taken out of the question. If the two largest cryptocurrencies by market cap can turn their overhead resistance into support, the bearish outlook will likely be jeopardized. Bitcoin would have to move above $12,000 to aim for $14,000, while Ethereum would have to slice through the $400 hurdle in order to rise towards $500 or higher.
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