Bitcoin Is Looking at a Short-Term Bull Reversal if Prices Pass $7,400

Bitcoin has created a hammer candle on the three-day chart, a warning of an impending bull reversal.

A break above the candle's high of $7,380 is needed to confirm the short-term trend change.

Bitcoin needs to break above $7,380 to confirm a short-term bull reversal and invite stronger buying pressure, the three-day chart indicates.

Specifically, the top cryptocurrency by market value created a hammer candle in the three days to Nov. 26.

A hammer candle, which comprises of a long lower shadow and a small upper body, means the three-day period began with pessimism, but ended on a more optimistic note.

While the pattern is considered a bullish signal, traders usually wait for confirmation in the form of strong follow-through, preferably a convincing move above the high of the hammer candle.

The long lower shadow attached to the hammer candle indicates seller exhaustion.

If the current three-day candle ends above $7,380, a bullish hammer reversal would be confirmed.

The location of the hammer candle is a good reason to believe a stronger bounce is in the offing.

A hammer candle represents bearish exhaustion, as noted earlier and gains credence when it appears following a notable price drop, which is the case here.