Bitcoin’s move above $12,000 is backed by an uptick in trading volumes and bullish readings on the daily chart.
BTC could close well above $12,000 today, confirming a falling channel breakout on the daily chart and extend gains toward $13,200 (July 10 high) in the short-term.
The 4-hour chart is reporting overbought conditions and a bearish indicator divergence. So, prices may pull back to $11,800–$11,600 and the bullish UTC close above $12,000 may be delayed till Wednesday.
The bullish case would weaken if prices drop below key average support, currently at $10,545, although that looks unlikely.
Bitcoin (BTC) is trading above $12,000 for the first time in four weeks and is reporting gains for the eighth consecutive day.
The top cryptocurrency by market value rose above $12,000 at 06:45 UTC and soon hit a high of $12,298, the highest level since July 10, according to Bitstamp data.
As of writing, BTC is changing hands at $12,185 on Bitstamp, representing 3.26 percent gains on the daily opening price of $11,800. The cryptocurrency has scored 2–7 percent gains in each of the preceding seven days.
If BTC prints a UTC close above $11,800 today, then the resulting eight-day winning streak would be the longest since June. Back then, prices had rallied for eight straight days, starting from June 19 to June 26. Prior to that, BTC eked out gains for eight consecutive days in December 2017.
The latest winning run looks sustainable as it is accompanied by a rise in bitcoin’s dominance rate – the cryptocurrency’s share of the total cryptocurrency market. The gauge, as calculated by data source CoinMarketCap, currently stands at 68.5 percent, the highest level since April 2017.
Further, the cryptocurrency seems to have found acceptance above key resistance at $12,000, as seen in technical charts.
So, with the path of least resistance to the higher side, BTC could extend the ongoing rise toward the next major hurdle at $13,200 in the short-term.
BTC is currently trading above the upper edge of the falling channel, currently at $12,000. A UTC close above that level would confirm the breakout and signal a revival of the rally from lows near $4,000 seen on April 1.
The breakout looks likely as the 5- and 10-day moving averages (MAs) are rising, indicating a bullish setup. The 14-day relative strength index (RSI) is also reporting bullish conditions with an above-50 print.
Further, the moving average convergence divergence histogram continues to produce higher highs above the zero line, a sign of strengthening bullish momentum.
And, last but not least, buying volumes (green bar) ticked higher yesterday, violating the downtrend line and validating the bullish move in prices.
So, the July 10 high of $13,200 could come into play over the next few days.
The RSI on the 4-hour chart is reporting overbought conditions with an above-70 print, while the MACD has produced lower highs as opposed to higher highs on price (bearish divergence).
So, a brief pullback may precede a rally to $13,200. That said, the bullish case would weaken only if the cryptocurrency finds acceptance below the ascending 10-day MA, currently located at $10,545.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; charts by Trading View