Bitcoin is eyeing change of fortunes above $6,800, having convincingly scaled a key moving average hurdle earlier today.
At press time, BTC is changing hands at a six-day high of $6,600 on Bitfinex – up 3.44 percent on the day.
The cryptocurrency remained bid over the weekend and rose to $6,400 as expected despite low investor participation. For instance, prices rose above $6,300 on Saturday, but trading volumes fell to $2.92 billion, the lowest level since November 7, according to CoinMarketCap.
However, the solid move above the 20-day moving average (MA) resistance of $6,400 seen today is backed by a pick-up in trading volume.
As of writing, 24-hour trading volume stands at $4.64 billion – up more than 50 percent from the 36-week lows seen on Saturday. Thus, rally looks sustainable and could be extended further towards $6,838 (inverse head-and-shoulders neckline resistance).
BTC's recovery from $6,080 (Thursday's low) and a rally to $6,600 has created a higher low (bullish setup) on the chart.
The relative strength index (RSI) is also biased toward the bulls (above 50.00).
So, prices look set to test the key resistance at $6,838 (inverse head-and-shoulders neckline resistance). Essentially, BTC is now creating the right shoulders of the inverse head-and-shoulders bullish reversal pattern.
Still, there is merit in being cautious as the cryptocurrency looks overbought as per the short duration charts.
The relative strength index (RSI) is at the highest level since April 24, meaning the cryptocurrency is at its most overbought in nearly three months.
Hence, a break above $6,838 might remain elusive for another 24-hours or could be short-lived for the time being.
- BTC's corrective rally has gathered pace and prices could rise to $6,838 (neckline resistance) in the next day or two.
- A close (as per UTC) above $6,838 would confirm a short-term bearish-to-bullish trend change and would open the doors to $7,920 (target as per the measured height method).
- Only a daily close (as per UTC) below $6,400 (20-day MA) would kill the odds of BTC rising to $6,838.
- A break below $5,755 (June 24 low) would revive the bearish view.
Edit (12:00 UTC, July 16, 2018): This article was updated to reflect a sudden rise in prices soon after initial publication.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
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