Bitcoin’s (BTC) price crossed key resistance yesterday, boosting the prospects of a stronger rally above $4,000.
The leading cryptocurrency by market value broke out of a bearish descending pattern and closed above key resistance at $3,633 yesterday. That came after picking up a strong bid on the anniversary of its 2017 all-time price high on Monday.
Tuesday’s close has also pushed up the probability of a bullish three-day close above $3,590 being confirmed on Thursday.
So, with the short-term picture looking bullish, the focus shifts to the next major resistance levels lined up at $4,000 (psychological hurdle) and $4,410 (Nov. 29 high).
BTC is currently trading at $3,750 on Bitstamp, having clocked a two-week high of $3,776 earlier today. The cryptocurrency has recovered 20 percent from the recent low of $3,122 but is still down 73 percent on a year-to-date basis.
BTC’s close above $3,633 on the daily chart bolstered the increasingly bullish technical setup, as represented by the positive divergence of the 14-day relative strength index (RSI) and the high-volume falling wedge breakout.
Further evidence that the bears have weakened is a bullish crossover between the 5- and 10-day exponential moving averages (EMAs).
On the hourly chart, the bull flag breakout confirmed yesterday created room for a rally to $3,840 (pole height added to breakout price).
Both the rising trendline and the stacking order of the simple moving averages (SMAs) also favor an extension of the ongoing rally.
The outlook as per the monthly chart would turn bullish if and when prices beat the former support-turned-resistance of the 21-month EMA, currently at $5,728.
- Tuesday’s close above $3,633 confirmed a short-term bearish-to-bullish trend change.
- BTC will likely test the psychological level of $4,000 in the next 48 hours, with the next target being resistance at $4,410 (Nov. 29 high).
- A daily close below $3,633 would weaken the bullish scenario, but is looking unlikely in the short-term
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Author – Omkar Godbole