Bitcoin Eyes $3.8K After High-Volume Price Breakout
Bitcoin saw a high-volume bullish move Friday that may have opened the doors for a rally above $3,800.
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Feb 11, 2019 at 11:00 a.m. UTC:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/YXKT6YR6RNEZVH3CTLHSFFU4KQ.jpg)
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- Bitcoin gained 7.8 percent on Friday, confirming a falling wedge breakout on the daily chart. The bearish-to-bullish trend change was backed by a jump in trading volumes to levels last seen in mid-November.
- Prices could soon cross the 50-day moving average resistance at $3,642 and test resistance levels lined up at $3,800 and $4,000 in the next few days.
- A break below the Jan. 29 low of $3,322 would invalidate the bullish setup. That looks unlikely, though, as the high-volume wedge breakout has confirmed bearish exhaustion signaled by falling volumes on the weekly chart.
Bitcoin (BTC) saw a high-volume bullish move Friday that may have opened the doors for a rally above $3,800.
The leading cryptocurrency by market capitalization jumped to $3,711 on Feb. 8 – the highest level since Jan. 19 – and ended the day with a 7.8 percent gain, according to Bitstamp data. That's the biggest single-day rise since Dec. 28
The rally to three-week highs confirmed an upside break of the falling wedge – a bullish reversal pattern carved out in the last five weeks.
Notably, trading volumes jumped 54.6 percent to $7.73 billion on Friday, according to CoinMarketCap data. The rise represents the first time volume has passed $7 billion since Dec. 24 and the highest reading in nearly three months. Further, the three-day average of 24-hour trading volumes has jumped well above $6 billion for the first time since Dec. 25.
The bullish breakout, therefore, looks to have legs and prices could soon crack the 50-day moving average (MA), which has has been serving as a strong resistance since Friday.
As of writing, BTC is changing hands at $3,595 on Bitstamp, representing an 8.2 percent gain on the January low of $3,322. The 50-day MA is currently located at $3,642.
Daily chart
BTC's jump to highs above $3,700 confirmed a falling wedge breakout, but failed to close above the 50-day MA, as per the daily chart.
While that average hurdle, currently at $3,642, has capped upside in the last 48 hours, the strong volumes suggest it could be passed soon.
Further, the 5- and 10-day MAs are trending north, having produced a bullish crossover over the weekend and the 14-day relative strength index (RSI) is also reporting bullish conditions with an above-50 reading.
As a result, BTC could soon rise toward $3,800 (Jan. 19 high) and possibly to the psychological resistance of $4,000.
6-hour chart
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A convincing break above the 50-candle MA on the 6-hour chart also supports the bullish reversal seen on the daily chart. Acting as resistance, the MA had blocked several attempted corrective rallies over the last three weeks.
Weekly chart
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BTC rose by 6.9 percent last week – the biggest weekly rise since mid-December – amid bearish exhaustion signaled by the slide in volumes in the last 10 weeks.
The cryptocurrency closed last week above the 10-week MA, neutralizing the immediate bearish view. Further, the 5- and 10-week MAs have shed bearish bias (are flatlined).
Disclosure: The author holds no cryptocurrency at the time of writing.
Bitcoin image via CoinDesk archives; charts by Trading View