Bitcoin (BTC) looks set to extend its two-day winning streak and could soon test the $9,000 mark, technical analysis suggests.
Over the last two days, bitcoin has retraced close to 30 percent of the recent drop from $11,660 (March 5 high) to $7,335 (March 18 high). Further, the cryptocurrency also witnessed an upside break of the key descending trendline yesterday. So, it appears the world's largest cryptocurrency by market capitalization has bottomed out for the short-term.
However, despite the bull flag breakout, the cryptocurrency has been restricted to a narrow range of $8,200–$8,700 for the better part of the last 20 hours.
Trading volume in the last 48 hours has stayed around the monthly average of $6.64 billion, as per CoinMarketCap, which is a slight cause for concern. A big rise in the trading volumes would have meant the recovery in BTC is backed by strong hands.
Still, the price chart analysis indicates BTC is possibly a building base around $8,200 for the next move higher towards $9,000.
As of writing, the cryptocurrency is trading at $8,448, according to CoinDesk's Bitcoin Price Index (BPI). The global average price, as calculated by CoinMarketCap stands at $8,498 – up 2.8 percent in the last 24 hours.
The above chart (prices as per Bitfinex) shows:
- Short-term bulls reversal as indicated by Sunday's bullish hammer and Monday's positive follow-through.
- BTC closed (as per UTC) above the 10-day moving average (MA) on Monday, indicating scope for short-term consolidation with a positive bias.
- Both the 5-day MA and 10-day MA have bottomed out (shed bearish bias).
- Major resistance is seen at $9,157 (200-day moving average) and major support is seen at $7,665 (March 15 low) and $7,240 (March 18 low).
The bullish RSI divergence followed by an upside break of the falling wedge further adds credence to the short-term bullish reversal as seen in the daily chart. Also, the 10-MA is biased to the bulls.
- BTC will likely test $9,000 (psychological hurdle) and $9,157 (200-day MA) in the next 24–36 hours.
- A daily close above the 200-day MA would open the doors for $10,000. Currently, further gains are ruled out, as suggested by the bearish weekly chart.
- On the downside, a move back inside the falling wedge would signal bullish invalidation.
- A daily close (as per UTC) below $7,240 (March 18 low) would revive the bearish outlook.
Compass image via Shutterstock