Bullish divergence, TD9 buy-signal for a brand new bitcoin aid rally
The price of Bitcoin (BTC) has risen sharply in the past 24 hours from under $ 17,600 to $ 18,400. Now two major technical indicators are signaling the likelihood of a major relief rally.
Bitcoin's 4-hour price chart shows a bullish divergence as a TD9 buy signal is printed. Both of these indicators usually light up when an asset is experiencing a strong sell-off and selling pressures are exhausted.
The Bitcoin sell-off could be losing steam
The 4 hour bullish divergence and the TD9 buy signal are conceptually similar in that they occur after a steep correction.
A bullish divergence is a technical pattern that revolves around the Relative Strength Index (RSI). The RSI is a momentum indicator that measures whether an asset is overbought or oversold.
The RSI has a scale from 0 to 100; Under 35 means an asset is oversold and over 75 means an asset is overbought. When the RSI drops below 35 and an asset begins to rebound, it creates a bullish divergence.
The Bitcoin 4-Hour Price Chart with RSI. Source: TradingView, Scott Melker
Scott Melker, a cryptocurrency trader, said Bitcoin's 4-hour price chart showed a bullish divergence as the price rebounded above $ 18,150. He said:
“We all know we have a nice confirmed oversold bullish divergence with RSI. RSI is currently pushing for descending resistance. If it catches on, the price should follow. I have no intention of closing for the time being. "
As Cointelegraph previously reported, Bitcoin has seen strong selling pressure from whales and miners in the past week. As a result, the BTC price has dropped sharply in the past two days, resulting in it being turned off in lower time periods, e.g. the 4-hour chart.
A pseudonymous trader called "CryptoISO" emphasized that the buy signal from the TD9 indicates an excessive sell-off.
TD9, short for Tom Demark 9, is an indicator that, similar to the RSI, also measures whether an asset is overbought or oversold. A TD9 buy signal occurs when the last nine candles are all lower than the four previous candles.
For example, let's say that the price of Bitcoin has been below $ 19,000 in the past 36 hours. If the 4 hour candle, which closed 52 hours ago, was above $ 19,000, a TD9 buy signal would light up.
The combination of the 4-hour bullish divergence and the TD9 buy signal shows that Bitcoin has been grossly oversold for the past three days.
As reported by Cointelegraph, whale clusters have $ 17,170 and $ 17,700 as the main support levels. As long as Bitcoin stays stable above these two levels, the chances of another rally remain high.
Bitcoin price compared to USDT offering. Source: Glassnode
Another bullish factor above the two support levels for whale clusters is the growing supply of Tether (USDT), which market cap is now close to $ 20 billion.
On major Bitcoin exchanges, such as Binance, investors often store secondary capital in USDT rather than cash, as this allows them to re-enter positions quickly. The steady rise in USDT supply is a positive sign of increasing confidence in Bitcoin.