Bitcoin's quick recovery from a minor wobble during Asian trading hours has strengthened its bull-case scenario, technical charts indicate
As of writing, CoinDesk's Bitcoin Price Index (BPI) is at $8,165 - up 3.9 percent from the overnight low of $7,573. That said, the cryptocurrency is still down 3.7 percent from the previous day's high of $8,582.
On Coinbase's GDAX exchange, BTC clocked a high of $8,650 yesterday before a technical failure at key trendline resistance pushed prices back to $7,535. However, the dip was short-lived and the cryptocurrency moved back above the $8,000 mark this morning and was last seen changing hands at $8,280.
The positive price action indicates the investors continue to cheer the conciliatory tone adopted by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission at Senate hearing on Tuesday.
Bitcoin 4-hour chart
The last 4-hour candle closed above the descending trendline (1), signaling a bullish breakout. The move adds credence to the bullish price-RSI divergence indicated on Tuesday and the bullish higher lows pattern (as indicated by rising trendline).
- BTC looks set to test yesterday's high of $8,650 and could make a move towards the $9,000 mark.
- A slight cause of concern is the drop in volumes seen on the 4-hour chart, which puts a question mark on the sustainability of the breakout.
Further, BTC may find it hard to hold on to gains above $8,572 (10-day moving average), given the 5-day and 10-day MAs are still sloping downwards, indicating bearish setup.
- A daily close (as per UTC) above the 10-day MA would validate the argument that BTC has bottomed out at $5,873 (Feb. 6 low).
- Bearish scenario: Failure to hold above trendline (1) followed by a drop below $7,535 could yield re-test of the recent low of $5,873.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase.
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