Following a bull breakout last night, bitcoin (BTC) looks set to test $10,000 and could possibly move higher over the weekend.
Bitcoin closed yesterday (as per UTC) at $9,759 on Bitfinex – the highest daily close since March 7 – signaling the upside break of the week-long narrowing price range we’ve been anticipating.
The cryptocurrency also clocked a two-month high of $9,875 yesterday. At time of writing, BTC is changing hands at $9,776 and remains on the hunt for a big break above the $10,000 mark, as indicated by the bullish setup in the technical charts below.
The chart above shows a pennant breakout (bullish continuation pattern), indicating that the rally from April lows below $6,500 has resumed.
The move has opened the doors for a rise to $10,455-$11,950 (target calculated using two variations of the measured height method).
However, the 4-hour relative strength index (RSI) is close to moving above 70.00, signaling overbought conditions. As a result, a rally to $11,950 looks to be a tough task to achieve and $10,455 may be more realistic.
The ascending, bullish 5-day moving average (MA) and 10-day MA also favor further upside in prices. Meanwhile, the RSI is stationed at 62 – well below 70 (overbought territory), leaving enough room for a rally to $10,400-$10,500.
And, last but not the least, BTC’s bullish breakout yesterday was backed by a 35 percent rise in trading volumes, according to CoinMarketCap. A high volume breakout only validates the argument that the rally has legs.
BTC looks set to test the 200-day MA resistance of $10,015. A close (as per UTC) above that level would strengthen the bull grip and could yield a sustained rally to $10,455 and above.
The outlook remains bullish as long as prices hold above the ascending 10-day MA, located at $9,290.
An unexpected close (as per UTC) below $8,652 (April 26 low, pennant low) would signal a short-term bullish-to-bearish trend change.