Bitcoin (BTC) scaled the crucial 50-day moving average (MA) on Monday for the first time in nearly two months, taking its price above $6,700.
The corrective rally picked up the pace 24 hours ago, possibly due to reports stating that BlackRock, INC – the world’s largest asset manager and exchange-traded fund (ETF) provider – is considering venturing into cryptocurrency markets. Later in the day, BlackRock CEO Larry Fink clarified rumors by stating that he doesn’t see a huge demand for cryptocurrencies from clients,
Still, BTC remained bid and closed (as per UTC) above the 20-day MA for the first time since May 20, validating the argument that a short-term bottom has been made at $5,755 (June 24 low).
While a move above the 50-day MA is encouraging, it does not qualify as a bullish reversal. Only a convincing break above the inverse head-and-shoulders neckline of $6,838 would confirm a short-term bearish-to-bullish trend change.
At press time, the leading cryptocurrency is changing hands at $6,720 on Bitfinex – up 5 percent in the last 24 hours – and the 50-day MA is located at $6,720.
BTC’s rally from the two-week low of $6,080, hit on Thursday, to today’s high of $6,771 has established a higher low (bullish pattern) on the daily chart.
Further, the relative strength index (RSI) has moved above 50.00 (in bullish territory) and the short-term moving averages (5-day, 10-day) are beginning to rise in favor of the bulls.
So, the cryptocurrency looks set to test $6,838 (inverse head-and-shoulders neckline hurdle), albeit after a minor intraday pullback as the short-duration charts are flashing overbought conditions.
The RSI is stationed well above 70.00, indicating the rally from $6,080 is overdone. So, prices could revisit the 10-candle MA support of $6,580 in the next few hours.
- BTC looks set to test $6,838 (inverse head-and-shoulders neckline), albeit after a minor pullback as the cryptocurrency is looking overbought as per intraday technical studies.
- A close (as per UTC) above $6,838 would confirm a short-term bearish-to-bullish trend change and would open up upside towards $7,920 (target as per the measured height method). That said, bulls would still need to observe caution as the area between $7,000-$7,100 is packed with stiff resistance lines.
- On the downside, a close below 20-day MA of $6,448 would weaken the odds of an inverse head-and-shoulders breakout.
Disclosure: The author holds no cryptocurrency assets at the time of writing.