• Bitcoin jumped to one-month highs earlier today, validating the falling wedge breakout seen in the 4-hour chart on Friday.
  • The outlook as per the daily chart remains neutral, as the cryptocurrency is still trapped in a symmetrical triangle. That said, a break above the upper edge of the triangle, currently located at $3,760, looks likely as an inverse head-and-shoulders breakout on the 4-hour chart has opened up upside toward $4,030 (target as per the measured height method). More importantly, the rally to one-month highs is backed by strong volumes and a rise in long positions.
  • A symmetrical triangle breakout, if confirmed, would imply a bearish-to-bullish trend change on the daily chart.
  • A failure to cross the triangle resistance at $3,760 would weaken the bullish case. The focus would again shift to the recent lows near $3,300 if the support at $3,530 (low of the left shoulder) is breached.

Bitcoin’s high-volume move to one-month highs could be the start of a stronger rally to above key resistance near $3,760.

The leading cryptocurrency by market capitalization rose to $3,727 at 07:00 UTC, the highest level since Jan. 19, according to Bitstamp data, validating Friday’s falling wedge breakout.

With a move to levels above $3,700, bitcoin has also witnessed an inverse head-and-shoulders breakout on the 4-hour chart – indicating a bearish-to-bullish trend change – and has opened up upside toward $4,000.

On the way higher, however, BTC could encounter stiff resistance near $3,760 – the upper edge of a contracting triangle (higher lows and lower highs) carved out over the last eight weeks. A failure to take out that hurdle would weaken the short-term bullish case.

That said, BTC is likely to cross that resistance this week, as the rally to one-month highs is backed by a pickup in both trading volumes and long positions (bullish bets).

Bitcoin’s 24-hour trading volume has jumped to highs above $8 billion for the first time since Dec. 20, according to CoinMarketCap data.

Further, BTC/USD longs on Bitfinex rose to 38,237 BTC earlier today – the highest level since March 30, 2018. Notably, long positions are still down at least 7 percent from record highs above 40,000 BTC witnessed in March last year. Therefore, the probability of a “long-squeeze” – a sudden price drop due to the unwinding of long positions – is quite low.

So, the odds of BTC confirming the contracting triangle breakout with a move above $3,760 appear high. As of writing, the cryptocurrency is changing hands at $3,700 on Bitstamp, representing a 3 percent gain on a 24-hour basis.

Daily chart

A bearish-to-bullish trend change on the daily chart would be confirmed if prices see a UTC close above the upper edge of the symmetrical triangle, currently at $3,760.

That looks likely as the 14-day relative strength index (RSI) is currently located at 61.00, the highest level since September. Further, the 5- and 10-day moving averages (MAs) are trending north indicating a bullish setup.

4-hour chart

The inverse head-and-shoulders breakout seen in the 4-hour chart indicates scope for a rally to $4,030 (target as per the measured height method).

Key averages are beginning to align in favor of the bulls too. The 50-candle MA is now sloping upwards and the 100-candle MA looks set to cross the 200-candle MA from below forming a bullish crossover.

The RSI, however, is reporting overbought conditions. Hence, a minor bout of consolidation or pullback could be seen before the contracting triangle resistance at $3,760 is breached.

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

Bitcoin image via Shutterstock; charts by Trading View

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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.