Bitcoin (BTC) picked up bid yesterday following a bullish breakout on charts and rose above $9,000 in a convincing manner. The cryptocurrency moved higher to $9,961 today – the highest level since Feb. 1, as per CoinDesk’s Bitcoin Price Index (BPI).
As of writing, BTC is up more than 60 percent from the Feb. 6 low below $6,000. Furthermore, in the last 24 hours, BTC has appreciated by nearly 12 percent.
The price rise should put to rest the fears that bitcoin may take a beating or move in a sideways manner during the Chinese holiday lull. Besides, as discussed yesterday, February has been a good month for bitcoin since 2015.
Still, the chart analysis suggests that a continued rally above $10,000 may not have legs.
Meanwhile, the broader markets are also solidly bid, currently. Litecoin has appreciated by 28 percent in the last 24 hours and is the biggest gainer among the top 10 cryptocurrencies by market capitalization. Meanwhile, ethereum’s ether token, Ripple’s XRP, Stellar and NEO are up at least 8 percent each.
The above chart (prices as per Coinbase) shows:
- BTC has moved above the resistance at $9,181.48 (23.6 percent Fibonacci retracement of the sell-off from record highs).
- Momentum studies: 5-day moving average (MA) and 10-day MA are curled up in favor of the bulls.
- The relative strength index (RSI) is on the rise, indicating a potential for a further rally in prices.
So, BTC looks set to test $10,000 and may extend gains to $11,000 as suggested by the inverse head and shoulders breakout.
However, gains above $10,000 are to be viewed with caution, the weekly chart indicates.
- The bearish 5-week MA and 10-week MA crossover suggest the weekly chart outlook remains bearish.
- Also, the 5-week MA is sloping downwards in favor of the bears and is currently seen at $9,826.55.
- The RSI remains below resistance zone of 53.00-55.00 (previous support zone), also in favor of the bears.
- While a rally to $11,000 is likely, the sustainability of gains above the $10,000 mark is under question.
- Bearish scenario: Failure to hit $10,000, followed by a daily close (as per UTC) below $7,851 (Feb. 11 low), would validate the bearish weekly chart and open the doors for a deeper sell-off to as low as $6,000.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase and Ripple.
Metro barriers image via Shutterstock
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.