Bitcoin’s (BTC) price is consolidating in a narrow range at press time and could regain bullish momentum above $8,350, technical charts indicate.
The leading cryptocurrency moved back above $8,000 on Friday as expected and was seen rising to recent highs above $8,500 over the weekend.
However, BTC has traded in a sideways manner in the last 60 hours. The upside has been capped around $8,300 and dips to $8,050 have been short-lived, according to Bitfinex data.
Despite the bull breakout, the price consolidation has neutralized the immediate bullish outlook, yet it is still too early to call a bearish reversal. Further, buyers may feel emboldened if the $250 trading range is breached to the upside, resulting in a resumption of the rally.
As of writing, BTC is changing hands at $8,170 on Bitfinex.
BTC witnessed a descending broadening channel breakout on Friday – a continuation pattern – which signaled a revival of the rally and opened the doors to a re-test of $8,507 (July 24 high).
However, the bullish move failed to materialize and the cryptocurrency ended up creating a sideways channel over the weekend, as seen in the above chart.
An upside break of the sideways channel now would validate the descending broadening channel breakout and allow a rally to 200-day moving average (MA) of $8,468. On the other hand, a move back into the descending broadening channel could prove costly.
That said, the probability of a bullish breakout of the sideways channel is high as the major moving averages are biased toward the bulls. For instance, the 50-candle, 100-candle, and 200-candle MA are trending north and located one below the other.
The relative strength index (RSI) is no longer reporting overbought conditions, meaning there is room for a rally to recent highs above $8,500 on the upside break of the sideways channel seen in the 4-hour chart. Further, the 10-day MA continues to rise in a bullish manner.
- Bitcoin’s price consolidation, when viewed against the backdrop of the descending channel breakout, indicates bullish exhaustion. Consequently, the immediate bullish outlook has been neutralized.
- A break above $8,340 (upper end of the sideways channel) would allow a re-test of $8,468 (200-day MA) and $8,507 (July 24 high). A daily close (as per UTC) above the 200-day MA would confirm a long-run bear-to-bull trend change.
- On the downside, a fall back into the descending broadening channel would shift risk in favor of a deeper price pullback to the 100-candle MA in the 4-hour chart, currently located at $7,496.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; Charts by Trading View
This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.
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