Bitcoin Bulls Seek Breakout to $10K or Higher
Bitcoin has been trading in a narrowing price range over the past week, but a bullish breakout is looking likely.
![Bitcoin](https://www.coindesk.com/resizer/X7U6ZAhatd7e_Qrh4usjJGqP00Y=/567x378/filters:quality(80):format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/OOSQAN7MLJCUNKTGVLAUROGU4I.jpg)
Bitcoin (BTC) has been trading in a narrowing price range over the past week, but a bullish breakout is looking likely, the technical charts suggest.
The cryptocurrency created a bearish outside-day candle last Wednesday, signaling the rally from the low of $6,425 had run out of steam. However, the bitcoin bulls ensured there was no negative follow-through on Thursday and defended $8,800 over the weekend.
While a convincing break above $9,500 has remained elusive so far, the charts suggest the bulls have the stronger hand going forward.
4-hour chart
![bitcoin-240](https://www.coindesk.com/resizer/koKPjcGLtKTdo5KFXbB6XHVGkuM=/560x253/filters:quality(80):format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/4DDIZ2D7MFBWPFC7ODYWCCT4IU.png)
The chart above shows that bitcoin is trading in a narrowing price range with higher lows and lower highs, forming a bull pennant pattern.
A bullish breakout would mean the rally from the low of $6,425 has resumed and could open the doors to $12,000 (target as per the measured height method – i.e. length of the flagpole added to breakout price).
While that target looks a little far-fetched, BTC could rally to $10,000 on confirmation of a bull-pennant breakout (4-hour close above pennant resistance of $9,400).
On the other hand, a downside break would add credence to last Wednesday's bearish outside-day candle and could yield a pullback to $8,490 (38.2 percent Fibonacci retracement of the rally from $6,425 to $9,767.4).
That said, the odds of a bull-pennant breakout are high as indicated by the price action in the daily chart below.
Daily chart
![download-6-10](https://www.coindesk.com/resizer/8pR6LcJgGWjbVYgr__VlQPKSbeg=/560x253/filters:quality(80):format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/BIIBZIYPSNHHRIZTH6CXVPGGXM.png)
The bears failed to capitalize on bullish exhaustion last week, as indicated by the bearish outside-day candle. This is evident from the lack of bearish follow-through on Thursday and higher lows pattern – $8,652 (April 26 low), $8,750 (April 28 low) and $8,818 (May 1 low).
Further, the gradually ascending 5-day moving average (MA) and 10-day MA continue to favor the bulls.
As of writing, BTC is changing hands at $9,120 on Bitfinex, representing marginal gains compared to the previous day's close (as per UTC) of $9,066.
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- Bitcoin will likely witness a bull-pennant breakout and rise towards $9,975 (200-day MA) and $10,000 (psychological hurdle).
- A daily close (as per UTC) above $10,000 could bring a stronger rally to $11,306 (38.2 percent Fibonacci retracement of the sell-off from $19,891 to $6,000).
- A downside break of the pennant pattern would weaken the bulls and expose support lined up at $8,490 and $8,104 (50-day MA).
- Only a daily close below $7,823 (April 17 low) would signal bear revival.
Bitcoin image via Shutterstock