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Bitcoin has erased nearly 24 percent of the price losses seen in 12 months to December 2018.

Sunday’s high above $7,500 could come into play again if a contracting triangle on the hourly chart ends with a bull breakout.

A UTC close below $6,762 would validate the bull exhaustion signaled on Sunday and allow a deeper correction to $6,000.

Dips to $6,000, if any, could find bids as the longer duration charts are biased bullish.

Despite a pullback from 9-month highs overnight, bitcoin (BTC) has still clawed back nearly a quarter of the losses since the drop from its all-time high in late 2017.

The leading cryptocurrency by market value is currently trading just below $7,100 on Bitstamp, having hit a high of $7,588 on Sunday – a level last seen on Aug. 2, 2018.

With the rally to nine-month highs, BTC erased 23.6 percent of the price slide from the all-time high of $20,000 reached in December 2017 to lows near $3,100 seen in December 2018.

Notably, with the next mining reward halving due in May next year, bitcoin looks likely to continue to recover its losses from the period.

Mining reward halving is aimed at controlling inflation by reducing the rewards per block mined by 50 percent. The process is repeated every four years and tends to put a strong bid under the cryptocurrency almost 1.5 years in advance, according to historical data.

For instance, bitcoin created a long-term bottom 18 months ahead of the reward halving in July 2016 and rallied 178 percent 12 months leading up to the event.

With history possibly looking to repeat itself, the path of least resistance is to the higher side. In the short-run, however, the price may pullback to establish a higher low (new base) before rallying further.

Daily and hourly charts

Bitcoin fell close to 4 percent on Sunday, leaving a red candle with a long upper shadow in its wake – one widely considered a sign of bullish exhaustion.

So far, however, the follow-through to that candle has been anything but bearish with the cryptocurrency finding takers near $6,860 earlier today and moving back above $7,000.

Further, the moving average studies continue to favor upside in prices. For instance, the 5- and 10-day moving averages (MAs), currently at $6,759 and $6,265, are trending north. The stacking order of the 50-day MA, above the 100-day MA, above the 200-day MA, is a classic bullish indicator.

A retest of highs above $7,500 could soon be seen if the contracting triangle seen on the hourly chart (above right) is breached to the higher side.

However, both the overbought readings on the 14-day relative strength and Sunday’s candle representing bullish exhaustion would gain credence if BTC finds acceptance below $6,762 (yesterday’s low) in the next 48 hours or so.

That could yield a deeper pullback toward the psychological support of $6,000. The probability of a drop to $6,762 would rise if the contracting triangle ends with a downside break.

Weekly chart

Bitcoin ended last week with 22 percent gains – the third biggest weekly gain since December (marked by numbers above). Further, the cryptocurrency closed above the 100-week MA, which may now offer support at $6,562.

Pullbacks to $6,000, if any, following a potential close daily close (UTC) below $6,762, could be short-lived, as the bullish (ascending) 5-week MA is currently located just below $6,050.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; charts by Trading View