Following a bull breakout last night, bitcoin (BTC) looks set to test $10,000 and could possibly move higher over the weekend.
Bitcoin closed yesterday (as per UTC) at $9,759 on Bitfinex – the highest daily close since March 7 – signaling the upside break of the week-long narrowing price range we've been anticipating.
The cryptocurrency also clocked a two-month high of $9,875 yesterday. At time of writing, BTC is changing hands at $9,776 and remains on the hunt for a big break above the $10,000 mark, as indicated by the bullish setup in the technical charts below.
The chart above shows a pennant breakout (bullish continuation pattern), indicating that the rally from April lows below $6,500 has resumed.
The move has opened the doors for a rise to $10,455–$11,950 (target calculated using two variations of the measured height method).
However, the 4-hour relative strength index (RSI) is close to moving above 70.00, signaling overbought conditions. As a result, a rally to $11,950 looks to be a tough task to achieve and $10,455 may be more realistic.
The ascending, bullish 5-day moving average (MA) and 10-day MA also favor further upside in prices. Meanwhile, the RSI is stationed at 62 – well below 70 (overbought territory), leaving enough room for a rally to $10,400–$10,500.
And, last but not the least, BTC's bullish breakout yesterday was backed by a 35 percent rise in trading volumes, according to CoinMarketCap. A high volume breakout only validates the argument that the rally has legs.
- BTC looks set to test the 200-day MA resistance of $10,015. A close (as per UTC) above that level would strengthen the bull grip and could yield a sustained rally to $10,455 and above.
- The outlook remains bullish as long as prices hold above the ascending 10-day MA, located at $9,290.
- An unexpected close (as per UTC) below $8,652 (April 26 low, pennant low) would signal a short-term bullish-to-bearish trend change.
Darts board image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.