Long-Term Bitcoin Price Indicator Rises for First Time in a Year
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- Bitcoin has risen back to $8,000 with the widely tracked 200-day moving average beginning to curl upwards in favor of the bulls for the first time since May 2018.
- A bull flag breakout seen in the hourly chart indicates scope for a rise to $8,400. The breakout is backed by bullish readings on both the hourly and 4-hour charts.
- A rally to $8,400 may not be sustainable, unless the move is backed by a rise in trading volumes. The daily chart is reporting a bearish divergence of trading volumes.
- On the downside, $7,205 is the level to beat for sellers. A UTC close below that would confirm a double-top breakdown and shift risk in favor of a slide toward $6,000.
Bitcoin (BTC) has moved back above $8,000 as a widely followed long-term indicator turns bullish for the first time in over a year.
The world’s largest cryptocurrency by market value is currently trading at $8,020 on Bitstamp – up more than $500 in the last 24 hours. Prices hit a high of $8,032 earlier today.
The 7 percent rise from the previous day’s low of $7,468 is noteworthy as the short-term technical charts had turned bearish earlier this week.
For instance, bitcoin dived out of a narrowing range on Wednesday, strengthening the case for pullback to $7,200 put forward by Monday’s “hanging man” candle.
The rise back to $8,000, therefore, could embolden buyers – more so, as the list of long-term technical indicators signaling a bull market continues to grow.
The latest to join the bandwagon is the 200-day moving average (MA) – a widely tracked barometer of long-term market trend.
The MA shed bearish bias (flattened out) in the first half of this month and is now beginning to curl upwards, further confirming a long-term bearish-to-bullish trend change signaled by several indicators over the last few weeks.
Bullish 200-day MA
As seen above, the 200-day MA has turned bullish for the first time since May 2018. As of writing, the average is located at $4,500.
It is worth noting that moving average studies are based on past data and tend to lag price. The 200-day MA’s bullish turn, therefore, likely reflects the recent price rally.
Hence, short-term corrective pullbacks are not ruled out. Should prices move below that MA, the long-term bullish outlook would weaken.
As for the next 24 hours, BTC could rise to $8,300, according to a bull breakout seen on the short-term technical charts.
Hourly and 4-hour charts
BTC witnessed a bull flag breakout on the hourly chart (above left) earlier today – a continuation pattern that often accelerates the preceding bullish move. The cryptocurrency, therefore, has a scope for a rise to $8,400 (target as per the measured height method).
The hourly chart also shows an upside break of the falling channel (lower highs and lower lows).
The relative strength index (RSI) is now biased bullish above 50, having breached the descending trendline in favor of the bulls earlier this week.
Meanwhile, on the 4-hour chart (above right), the moving average convergence divergence (MACD) histogram has crossed over to bullish territory above zero and the RSI has violated the falling trendline in favor of the bulls.
With the odds stacked in favor of the bulls, BTC could challenge the recent high of $8,390 in the next day or two. A violation there would expose next major resistance at $8,500 (June 2018 high).
Even so, the bulls need to observe caution, as trading volumes have dropped over the last seven days as seen in the chart below.
Daily chart
Bitcoin’s rise from last Friday’s low of $6,178 is accompanied by lower highs on the volume bars.
That bearish divergence puts a question mark on the sustainability of recent gains and a further rise to $8,300, if any.
That said, the case for a fall back to $6,000 would strengthen only if the price closes below $7,206, confirming a double-top breakdown, as discussed yesterday.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; charts by Trading View
via https://www.ohnocrypto.com/ Omkar Godbole, Khareem Sudlow