Bitcoin Price Jumps 10%, But Bull Reversal Still $700 Away

Bitcoin logged double-digit gains on Wednesday, neutralizing the short-term bearish view.

A close above $7,870 is now needed to invalidate the lower-highs set up and confirm a short-term bullish reversal.

Bitcoin surged by over 10 percent on Wednesday - the biggest single-day gain since Oct. 25, according to CoinDesk's Bitcoin Price Index.

Notably, prices had slumped to seven-month lows below $6,500 around lunchtime, but the breakdown was quickly undone and the cryptocurrency was trading above $7,400 before midnight.

The rebound from multi-month lows is a tell-tale sign of seller exhaustion - especially, as it erased the losses seen in the preceding eight days.

With bitcoin currently trading at $7,170, the bull reversal is still $770 away.

Bitcoin has charted a series of lower highs and lowers lows over the last five months.

The last lower high at $7,870 was printed on Nov. 29 and is still intact.

A bullish divergence occurs when an indicator prints higher lows, contradicting lower lows on price, and is considered an early warning of an impending corrective bounce.

Wednesday's big bullish engulfing candle is indicating seller exhaustion and would gain credence if prices find acceptance above $7,450 in the next 24 hours.