Bitcoin is on a roll since Friday after Chinese President Xi Jinping announced that his country would “take the leading position in the emerging field of blockchain.”
The pioneer cryptocurrency surged over 40% to hit a high of $10,480 on Oct. 26. Now, several technical indicators are signaling that bitcoin is on the verge of a major price movement that could take it to $16,500.
Bitcoin Technical Analysis
The recent upswing bitcoin experienced took it to the top of a descending parallel channel that has been developing on its 1-day chart since Sept. 26. Since then, BTC has been contained within three parallel lines. Every time it drops to the lower line, it rebounds to the middle or upper one. Conversely, when it surges to the upper line, it pulls back to the middle or the lower one.
At the moment, bitcoin is trading around the upper line of the parallel channel following the recent 40% move. If the buying pressure behind this cryptocurrency continues to increase, it could soon break out of the descending parallel channel, which seems to be part of a major bull flag.
Investopedia defines a bull flag as a continuation pattern, which has been developing on bitcoin’s 1-day chart since Mar. 26. The uptrend that took BTC to nearly $14,000 formed the flagpole. Meanwhile, the current consolidation phase it entered Sept. 26 is forming the flag. This technical pattern estimates a breakout in the same direction of the previous trend. The height of the flagpole presents a 70% target to the upside.
Bitcoin must break through the 100- and 150-day moving averages in order to validate the bull flag. These moving averages are currently serving as a major resistance cluster. In the last few days, they have rejected BTC and pushed it back below $9,700. As a result, a daily candlestick close above the 150-day MA, which sits at $9,800, could validate the bull flag. Only then could bitcoin surge to $16,500.
Big Chonis, a popular trader on Twitter with over ten years of experience, believes that BTC is contained by the 38.2% Fibonacci retracement zone. This is a significant resistance level due to its “support through the past several months.” Bitcoin is now “backtesting” the 38.2% Fib and breaking through it could send it to test the next resistance levels at $12,350, $13,500, $14,000 and $16,300.
CCN reached out to Tone Vays, former VP at JP Morgan and organizer of Unconfiscatable, Understanding Bitcoin and Financial Summit, to know his opinion about the current state of the market. Vays stated that the 128-day moving average, which sits around $10,000, poses a significant threat to the continuation of the bullish trend seen in the last few days. If bitcoin is not able to close above this moving average, then a pullback to the 200-day moving average or even the $8,500 range is very likely.
“I’m neutral leaning bullish on the daily chart, but looking for a bigger pull back into [the 50 and 200-day moving average]. I wouldn’t be trading right now. I know there is a lot of volatility. But, right now bitcoin could be in a bull market and still pull back to the $8,500 range,” concluded Tone Vays.
China’s decision to embrace blockchain technology appears to have revived bullish sentiment across the crypto community. Binance CEO Changpeng Zhao believes this could indeed be the catalyst that takes bitcoin to higher highs. As the market turns bullish, the pioneer cryptocurrency sits at a pivotal point in its trend. On the upside, it could rise to around $16,500, but on the downside, it could fall to $8,500. It all depends on its ability to trade above $10,000.
This article was edited by Sam Bourgi.
Last modified: October 29, 2019 13:43 UTC