Bitcoin May be Building for a Price Move to $11K
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Bitcoin has jumped to $10,500 as expected and looks set to test key resistance at $11,120 over the weekend with the daily chart indicators beginning to align in favor of the bulls. The outlook as per the daily chart would turn bullish if BTC prints a UTC close above $11,120 on the back of high volumes. Prices may pullback to key supports at $10,318 and $10,172 first, as the hourly chart is reporting bearish divergence of key indicators.Bitcoin (BTC) is flashing green for the fourth consecutive day and could test key resistance above $11,000 over the weekend.
The top cryptocurrency by market value is currently trading at $10,530 on Bitstamp – up 1.10 percent on the daily opening price of $10,417. Prices rose 1, 5 and 3 percent on Tuesday, Wednesday and Thursday, respectively.
Bitcoin’s repeated rebound from sub-$9,400 levels in the 13 days to July 29 likely indicates seller exhaustion. Another strong sign of bearish exhaustion emerged in the form of a long-legged doji candle on July 28, as discussed earlier this week.
Hence, BTC’s $1,000 rise seen in the last 48 hours is hardly surprising. The bullish move could be extended further as short duration technical studies are beginning to align in favor of the bulls.
Daily chart
The 14-day relative strength index seems to have found acceptance above 50.00, a sign of bull market conditions.
The moving average convergence divergence (MACD) histogram, an indicator used to identify trend change and trend strength, has crossed above zero, confirming bullish reversal. The MACD is indicating that the pullback from June’s high of $13,880 has ended and the path of least resistance is now to the higher side.
So, BTC could test the bearish lower high of $11,120 (July 20 high) over the weekend. A high-volume UTC close above that level would further confirm bullish revival and open the doors to $13,000.
The widely followed 50-day moving average (MA) is currently located at $10,570 may cap upside for the next few hours, though, as BTC is looking heavy on the intraday charts.
Hourly chart
Both the RSI and the MACD have produced lower highs, contradicting the higher highs on price.
The bearish divergence of key indicators suggests scope for minor pullback to support lines located at $10,318 and $10,172.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; charts by Trading View