Bitcoin's (BTC) price is consolidating in a narrow range at press time and could regain bullish momentum above $8,350, technical charts indicate.
The leading cryptocurrency moved back above $8,000 on Friday as expected and was seen rising to recent highs above $8,500 over the weekend.
However, BTC has traded in a sideways manner in the last 60 hours. The upside has been capped around $8,300 and dips to $8,050 have been short-lived, according to Bitfinex data.
As of writing, BTC is changing hands at $8,170 on Bitfinex.
BTC witnessed a descending broadening channel breakout on Friday – a continuation pattern – which signaled a revival of the rally and opened the doors to a re-test of $8,507 (July 24 high).
However, the bullish move failed to materialize and the cryptocurrency ended up creating a sideways channel over the weekend, as seen in the above chart.
An upside break of the sideways channel now would validate the descending broadening channel breakout and allow a rally to 200-day moving average (MA) of $8,468. On the other hand, a move back into the descending broadening channel could prove costly.
That said, the probability of a bullish breakout of the sideways channel is high as the major moving averages are biased toward the bulls. For instance, the 50-candle, 100-candle, and 200-candle MA are trending north and located one below the other.
The relative strength index (RSI) is no longer reporting overbought conditions, meaning there is room for a rally to recent highs above $8,500 on the upside break of the sideways channel seen in the 4-hour chart. Further, the 10-day MA continues to rise in a bullish manner.
- Bitcoin's price consolidation, when viewed against the backdrop of the descending channel breakout, indicates bullish exhaustion. Consequently, the immediate bullish outlook has been neutralized.
- A break above $8,340 (upper end of the sideways channel) would allow a re-test of $8,468 (200-day MA) and $8,507 (July 24 high). A daily close (as per UTC) above the 200-day MA would confirm a long-run bear-to-bull trend change.
- On the downside, a fall back into the descending broadening channel would shift risk in favor of a deeper price pullback to the 100-candle MA in the 4-hour chart, currently located at $7,496.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; Charts by Trading View
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