As bullish indicators strengthen, bitcoin now looks set to extend gains to $11,000 or higher, chart analysis indicates.
Having defended $9,300 over the weekend amid low volumes, the cryptocurrency picked up bids and rose to a high of $10,443 yesterday, according to CoinDesk’s Bitcoin Price Index (BPI). The uptick was backed by a 28 percent rise in trading volumes, as per CoinMarketCap.
A high volume break above key psychological resistance indicates strong hands are at play, so it’s not surprising that the price is on the up. As of writing, bitcoin (BTC) is trading at $10,707, having clocked a session high of $10,714.47 earlier today.
Activity in the individual markets reveals that investors continue to use tether to accumulate bitcoins. Trading volume in BTC/USDT (bitcoin-tether exchange rate) on OKEx has gone up by 6.96 percent in the last 24 hours. Meanwhile, U.S. dollar trading volume on Bitfinex (BTC/USD) has increased by 6.61 percent.
The cryptocurrency is up 14 percent from the lows seen over the weekend and has gained almost 12 percent in the last 24 hours, according to CoinMarketCap.
Looking ahead, the cryptocurrency looks set to extend gains to the 10-week moving average (MA) of $11,385 in the next 24 hours.
Bullish continuation pattern: the upside break of the sideways channel signals continuation of the rally from the low of $9,280 seen over the weekend. Further, the upside break is backed by an uptick in volumes. So, BTC could extend the rally to $11,000, according to measured height method.
The relative strength index (RSI) shows overbought conditions, thus BTC may consolidate over the next couple of hours before extending the rally.
The daily chart shows BTC could be creating a bullish reversal pattern known as an inverse head-and-shoulders.
The neckline resistance of the inverse head-and-shoulders pattern is seen at $11,704. Meanwhile, the descending trendline (drawn from the Dec. 17 high and Jan. 6 high) resistance is located around $11,930 today and is seen sloping downwards to $11,650 by the weekend.
A daily close (as per UTC) above the trendline would signal a long-term bullish reversal.
A convincing move above the trendline resistance would push the weekly RSI above the key resistance of 53.00, signaling a long-term bullish trend revival.
Bitcoin looks set to test $11,000 today and could extend gains to $11,385 (weekly 10-MA). A violation there would shift attention to key resistance levels: the inverse head-and-shoulders neckline and the descending trendline.
A daily close above the descending trendline would allow for a stronger rally to $17,400 (inverse head and shoulders breakout target as per the measured height method).
Bearish scenario: Rejection at the weekly 10-MA, followed by a quick drop below $9,280 (Feb. 25 low) would add credence to the bearish weekly RSI and trigger a sell-off to $8,000-$7,800.