- Bitcoin has recorded double-digit gains for three consecutive weeks, a feat last seen during the height of the bull market in 2017.
- BTC’s quick recovery from Friday’s low of $6,178 indicates "buy the dip" mentality is quite strong. Further, the daily and weekly charts are biased bullish. Prices, therefore, could rise to $8,500 (July 2018) this week.
- Before such a rise, however, we may see a correction to $7,500–$7,200, according to the hourly chart.
- The short-term outlook would turn bearish only if prices find acceptance below the 30-day moving average, currently at $6,239.
Bitcoin (BTC) is looking strong, having registered double digit gains for three consecutive weeks.
The leading cryptocurrency by market value closed last week with 17.5 percent gains, having rallied 22.16 percent and 10.62 percent in the preceding two weeks, respectively, according to Bitstamp data.
The last time BTC witnessed a similar bullish run was in the final quarter of 2017, when the cryptocurrency had logged in double digit gains for five weeks straight to hit an all-time high of around $20,000 on Dec. 17.
The latest weekly winning streak could be extended further, as BTC’s quick recovery from Friday’s lows below $6,100 to a high of $8,299 on Sunday indicates a strong “buy the dip” mentality.
As of writing, BTC is changing hands at $7,903, representing a 1.36 percent drop on the day.
Other top cryptocurrencies like ether (ETH), litecoin (LTC), binance coin (BNB) and XRP are also reporting moderate losses, according to CoinMarketCap.
As can be seen, BTC has logged its first three week run of double digit gains since December 2017.
Notably, prices bounced up sharply from the 5-week moving average (MA) last week and closed on a positive note, reinforcing the bullish view put forward by that ascending average.
There have also been two bullish crossovers in the last week: one of the 5- and 100-week MAs, and another of the 10- and 50-week MAs, suggesting the path of least resistance is to the higher side.
What’s more, BTC closed well above September 2018 high of $7,411 last week. The cryptocurrency, therefore, appears on track to test the next resistance at $8,500 (July 2018 high).
Bitcoin closed with nearly 13 percent gains on Sunday, marking a strong follow-through to the dip demand highlighted by Friday’s long-tailed daily candle.
The short-term outlook, therefore, remains bullish with scope for a rally to $8,500, as suggested by the weekly chart.
Confirming the bullish case is the positive reading on the Chaikin money flow (CMF) index, indicating increasing buying pressure. Further, the 10-day moving average (MA) is also trending north in favor of the bulls.
The outlook as per the daily chart would turn bearish only if and when the price finds acceptance below the 30-day MA, currently at $6,239. That average resistance was breached with a high-volume rally upside move on Feb. 8 and has reversed pullbacks ever since.
While the weekly and daily charts are biased bullish, the short duration view below indicates a pullback to $7,500 may be in order before a rally to $8,500.
On the hourly chart, BTC is currently trading above the head-and-shoulders neckline of $7,848, having dived out of a rising wedge – a bearish reversal pattern – in the Asian trading hours.
A head-and-shoulders breakdown would be confirmed if prices drop below $7,848, opening doors for a deeper correction to the $7,500–$7,200 support zone.
That said, with the longer duration charts biased bullish, any dips to $7,500 or below will likely be short-lived.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
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