Cautiously Bullish: Bitcoin Price Clears Key Trendline to Pass $6.6K

Omkar Godbole
Oct 9, 2018 at 11:01 UTC
Updated Oct 10, 2018 at 12:01 UTC
markets

Bitcoin saw a low-volume bullish breakout Monday, but the long-awaited move is sending mixed signals to investors

The leading cryptocurrency cleared the trendline sloping downwards from the July 25 high and Sept. 5 high around midday yesterday, adding credence to the argument put forward by many, including billionaire investor Novogratz, that the market has carved out a long-term bottom around $6,000.

However, so far, the bullish trend change hasn’t significantly revved up investor interest. This is evident from the fact that the total trading volume rose by a meager 15 percent yesterday, according to CoinMarketCap. More importantly, 24-hour trading volume is holding below $4 billion (near the yearly low so far).

Further, the follow-through has not been impressive either. By now, one would have expected BTC to be trading above last week’s high of $6,741. After all, the breakout occurred after a prolonged period of low volatility action. Instead, it is trading at $6,650 at press time and is holding just above the trendline support (former resistance) of $6,630

Hence, there is merit in being cautious, despite BTC’s move above the falling trendline.

Daily chart

As seen in the daily chart, BTC closed above the 2.5-month long falling trendline yesterday, signaling a bullish reversal.

However, the lackluster response to the upside break likely indicates that investors need a more credible evidence of a bullish breakout.

The cryptocurrency is likely to adopt a stronger bullish bias if it can cross the next key hurdle at $6,775 (upper Bollinger band) on the back of strong volumes.

Weekly chart

As can be seen, BTC has been struggling to find acceptance above the 10-day exponential moving average (EMA) since mid-September. Therefore, BTC’s upside break of the trendline, as seen in the daily chart, would look more convincing once the 10-day EMA is scaled.

View

  • BTC took a bullish turn Monday, opening doors for a rally to $7,000, but low volumes suggest caution is advised. The bullish move will look more legitimate if the 24-hour trading volume crosses $5 billion in the next few hours.
  • The outlook would change from cautiously bullish to strongly bullish if BTC can rise above the 10-week EMA at $6,712. As per the daily chart, a move above the upper Bollinger band of $6,775 would also bolster the bullish setup.
  • A UTC close back below the 2.5-month-long falling trendline would neutralize the immediate bullish scenario.
  • A break below the Oct. 3 low of $6,424 would put the bears back into the driver’s seat.

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

Bitcoin image via Shutterstock; Charts by Trading View 

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