Bitcoin recently consolidated inside a somewhat symmetrical triangle formation visible on its 4-hour time frame before breaking out. Price has closed above the top of the triangle around $6,700 to signal that bulls are gaining the upper hand.
This could lead to a rally that’s the same height as the chart formation, which spans $6,000 to $8,400. However, the 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. Still, it’s worth noting that price has moved past the 200 SMA as an early signal of bullish momentum.
Stochastic is pointing north to signal that the price could see more upside, but this oscillator is also dipping into the overbought region to signal exhaustion. Turning lower could mean a return in selling pressure and a retest of the broken triangle top or a move back down to support at $6,400. RSI has more room to climb before reflecting overbought conditions, so buyers might have a bit more energy to push for gains.
Bitcoin has had a couple of positive updates so far this week, allowing traders to take some attention off pending bitcoin ETF applications. First is Google’s plans to reverse its bitcoin and ICO ad ban on its Adwords platform by next month, which should bring a fresh round of interest from the general public. However, the tech giant will only allow ads from regulated companies targeting audiences in the US and Japan.
Next is the Bitmain IPO filing which came with a release of their financial statements. Revenues and profits have grown exponentially over the past couple of years, and going public could mean more gains for the Chinese Bitcoin mining company and the cryptocurrencies it is involved in, namely Bitcoin and Bitcoin Cash.
Images courtesy of TradingView