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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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.