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Bitcoin Rebounds Above $47,000 Despite Bearish Chart

Bitcoin regained some lost ground early on Monday, ignoring early indications of a bearish reversal on the weekly chart so far.

The cryptocurrency hit a high of $47,162 during European morning trading, after falling to $43,119 on Sunday – its lowest since February 8. Bitcoin is up 5% in 24 hours, near $47,230 at press time.

The rise comes despite signs of a bearish trend reversal on a longer-duration technical chart. The cryptocurrency fell 21% in the seven days to Feb. 28, despite multiple favorable market events, forming an engulfing bearish pattern on the weekly chart.

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The candlestick pattern indicates a reversal of bearish conditions, as sellers managed to push prices below the previous week’s “open” price (Monday 00:00 UTC).

A similar bearish engulfing pattern marked the end of the previous bull market in December 2017. The cryptocurrency then entered a 12-month bear market which bottomed out after falling 83% to near $3,100. .

Although it is too early to end the bull market, the bearish engulfing pattern could lead to chart-driven selling.

Blockchain data also shows signs of slowing demand. The total number of bitcoin addresses with less than 0.01 BTC also fell slightly, according to data from Glassnode, indicating that retail investment has started to decline. The same can be said for wallet addresses containing 1 BTC up to 1,000 BTC, where interest from institutional buyers appears to be capped.

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That said, the engulfing candle pattern is just one signal among many market indicators and historical data shows that the cryptocurrency saw multiple corrections of 30-39% during the 2017 bull market.

“BTC has found temporary footing, Jehan Chu, managing partner at cryptocurrency investment firm Kenetic Capital, told CoinDesk via WhatsApp. “Institutions and long-term investors are forming a solid backdrop and speculators are smelling a buying opportunity.”

Traders should expect continued volatility, he added, as buyers “prove a floor” above the $40,000 mark before a rally back to $50,000 as buying resumes.

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