Bitcoin (BTC) price is currently in the process of a strong reversal, which has seen the digital asset quickly recover 8.16% to trade slightly above $7,200.

On Dec. 17 the digital asset broke below the $6,800 support level and swiftly commenced a tumble to the $6,450 support where it bounced of the lower support of the long-term descending channel.

Many analysts cautioned that if bulls failed to buy into the dip, a price drop below the $6,400 increased the possibility of a revisit to $5,500 to $5,350. Fortunately for bulls, the price bounced off the critical trendline and the digital asset could now be en route to flipping the $7,300 resistance back to support.

Cryptocurrency market daily overview. Source: Coin360

Is this a trend reversal?

BTC USD weekly chart. Source: TradingView

Earlier in the day, veteran commodities trader Peter Brandt tweeted a logarithmic chart of Bitcoin’s long term price action and wrote:

“Bitcoin has apparently held at important support.”

A number of other traders also pinpointed the importance of Bitcoin price remaining above this support and today’s strong upside move is sure to have relieved worried investors, at least for the time being.

Interestingly, the rebound to $7,235 also filled the CME gap from Dec. 14-15, a phenomenon that has become increasingly common for BTC/USD this year.

Bitcoin CME Futures chart. Source: Tradingview

Bitcoin turns bullish on the shorter time frame

BTC USD 4-hour chart. Source: TradingView

On the shorter time frame, one can see that a powerful oversold bounce took place, flipping the moving average convergence divergence (MACD) histogram to positive and producing a strong bull cross between the MACD and the signal line.

BTC USD 4-hour MACD, RSI, Stoch chart. Source: TradingView

As suggested in the previous analysis, the relative strength index (RSI) bounced around 20 and now extends into bullish territory above 61. The price also rose above the moving average of the Bollinger Bands and the indicator suggests that today’s move could extend to $7,250 before becoming exhausted.

Bitcoin 1-day price chart. Source: Coin360

Despite yesterday’s carnage, the Bitfinex BTC/USD longs have again continued to rise higher and it clear that many traders view the current prices as an opportunity to accumulate more Bitcoin and open long positions.

BTC/USD Longs daily chart. Source: TradingView

Meanwhile, Bakkt volume just broke another all-time high today with a daily trading volume of 5,690 BTC, which translates to approximately $39.8 million.

The overall cryptocurrency market cap was $191.6 billion at press time with many altcoins also enjoying healthy 5 to 10% gains.

The views and opinions expressed here are solely those of the author (@HorusHughes) and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.