Bitcoin has battled back from a critical level of support to rally by 13.5% in 24 hours.

It is now testing the $7,400 level of support as well as the daily 22 exponential moving average (EMA), which has been a bitter point of resistance since November 11.

A breakout above the 22 EMA and $7,400 will almost certainly precede a rally towards $7,900 and $8,350, which is the current resting place of the daily 200 EMA.

However, another rejection from this point would likely result in Bitcoin falling back to $6,850, with the potential of a bear market still looming.

For a bullish reversal to take place, Bitcoin needs to break above the confluence of the daily death cross, which is at $8,650 after the 50 EMA crossed the 200 EMA to the downside on November 22.

If it can push above that level, the next target would be creating a long-awaited higher high at $10,600 following consecutive lower highs from the $14,000 top in June.

Yesterday, Coin Rivet reported on a trader who had $26 million in unrealised losses on Bitfinex following Bitcoin’s slump. The recent rally has seen Joe007 claw back some profit, with his losses now standing at just $11 million.

The Bitfinex leaderboard seems to directly correlate with the surging number of long positions on the exchange, which means that a long squeeze may become more unlikely unless price starts to drop through support at $6,400.

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