Cautiously Bullish: Bitcoin Price Clears Key Trendline to Pass $6.6K
Bitcoin saw a low-volume bullish breakout Monday, but the long-awaited move is sending mixed signals to investors
The leading cryptocurrency cleared the trendline sloping downwards from the July 25 high and Sept. 5 high around midday yesterday, adding credence to the argument put forward by many, including billionaire investor Novogratz, that the market has carved out a long-term bottom around $6,000.
However, so far, the bullish trend change hasn't significantly revved up investor interest. This is evident from the fact that the total trading volume rose by a meager 15 percent yesterday, according to CoinMarketCap. More importantly, 24-hour trading volume is holding below $4 billion (near the yearly low so far).
Further, the follow-through has not been impressive either. By now, one would have expected BTC to be trading above last week's high of $6,741. After all, the breakout occurred after a prolonged period of low volatility action. Instead, it is trading at $6,650 at press time and is holding just above the trendline support (former resistance) of $6,630
Hence, there is merit in being cautious, despite BTC's move above the falling trendline.
Daily chart
As seen in the daily chart, BTC closed above the 2.5-month long falling trendline yesterday, signaling a bullish reversal.
However, the lackluster response to the upside break likely indicates that investors need a more credible evidence of a bullish breakout.
Hence, we remain cautiously bullish on the cryptocurrency and would adopt a strong bullish bias once it has crossed the next key hurdle of $6,775 (upper Bollinger band) on the back of strong volumes.
Weekly chart
As can be seen, BTC is struggling to find acceptance above the 10-day exponential moving average (EMA) since mid-September. Therefore, BTC's upside break of the trendline, as seen in the daily chart, would look more convincing once the 10-day EMA is scaled.
View
BTC took a bullish turn Monday, opening doors for a rally to $7,000, but low volumes are forcing us to adopt a cautious stance. The bullish move would look more legitimate if the 24-hour trading volume crosses $5 billion in the next few hours. The outlook would change from cautiously bullish to strongly bullish once BTC rises above the 10-week EMA of $6,712. As per the daily chart, a move above the upper Bollinger Band of $6,775 would bolster the bullish setup. A UTC close below the 2.5-month long falling trendline would neutralize the immediate bullish setup. A break below the Oct. 3 low of $6,424 would put the bears back into the driver's seat.Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; Charts by Trading View
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