Despite the bearish chart setup, bitcoin (BTC) rose to a six-day high on Monday, putting a corrective rally to $7,000 back on the map.
The leading cryptocurrency unexpectedly picked up a bid around $6,450 at 16:00 UTC yesterday and rose to $6,850 – the highest level since June 12, according to Bitfinex data.
The $400 rally may have trapped a few bears on the wrong side of the market, given the pennant breakdown on the 4-hour chart had called for a drop to $6,000.
Yesterday's gravity-defying price action in BTC has boosted the odds of a rally to $7,024 (23.6 percent Fibonacci retracement of the sell-off from $9,990 to $6,108). However, the long-run outlook remains bearish for now.
At press time, bitcoin is changing hands at $6,700 on Bitfinex.
As seen in the chart above, the 4-hour candle crossed the upper Bollinger band in a convincing manner yesterday, signaling a bullish Bollinger band (standard deviation of +2 and -2 on 20-candle moving average) breakout.
Trading volume also picked up (circled on chart), adding credence to the bullish move. Meanwhile, the cryptocurrency has also found acceptance above the 50-candle moving average (MA) and the relative strength index (RSI) is biased bullish (above 50.00).
So, BTC will likely clear the immediate resistance at $6,736 (yellow dotted line) and test supply around $7,024 (23.6 percent Fibonacci retracement of the drop from $9,990 to $6,108) in the next 24 hours.
It's worth noting that the descending (bearish) 100-candle MA is located at $7,045, marking a key resistance level for the bulls.
The positive Bollinger band setup also validates the argument put forward by the bullish price-relative strength index (RSI) divergence last week that the cryptocurrency has found a temporary low at around $6,100.
BTC closed above the 10-day MA yesterday, invalidating the immediate bearish outlook. It also created a bullish outside-day candle on Monday (price action engulfed Sunday's high and low) – that is, the day began on a pessimistic note, but ended optimistically. Thus, the probability that the corrective rally will gather traction is high.
Compass image via Shutterstock
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.
Momentum Is Building to Block Ethereum ASICs
Several ethereum miners and developers have come forward with the goal of stopping specialized mining hardware from effectively operating on the network.
Underway since April, the controversy surro
Brazil's Largest Independent Broker Is Launching a Crypto Exchange
The parent company of Brazil's largest independent broker is setting up a cryptocurrency exchange, Bloomberg reported Thursday.
Grupo XP, which owns brokerage firm XP Investimentos, plans to launch
XRP Shot Up 75% During Friday's Bullish Trading Session
The price of XRP spiked as high as 75 percent above its opening price at one point during Friday's trading session amidst a broader market bull parade.
At roughly 14:45 UTC, the price of XRP rose
US Congressman Drafts Bills to Aid Blockchain Development
U.S. Representative Tom Emmer wants to support the development and use of blockchain technology and cryptocurrencies.
To that end, the lawmaker announced a trio of blockchain-focused bills Friday,
Report Finds Cryptojacking Instances Jumped 400% In A Year
Instances of cryptojacking malware have jumped more than 400 percent since last year, a new report finds.
A collaborative group of cybersecurity researchers called the Cyber Threat Alliance (CTA) p
Bitmain CEO Announces New 7nm Bitcoin Mining Chip
The bitcoin mining industry is having an exciting couple of days.
Just a day after Bitfury revealed a new 14nm mining chip called the Bitfury Clarke, Bitmain has upped the ante with the announcemen
Brave Browser Is Using Civic's Blockchain Platform to Verify Publishers
Privacy-focused internet browser Brave will begin using blockchain identity startup Civic's verification services to ensure publishers are paid for their content with Brave's Basic Attention Token (BA
US Navy Launches Blockchain Research in Mission to Improve Tracking System
A U.S. Navy command is exploring the potential of blockchain technology in tracking aircraft parts.
The Naval Air Systems Command (NAVAIR) – which provides material support for aircraft and airborn