Bitcoin (BTC) clocked a 2.5-week high of $8,225 on Bitfinex earlier today and could soon scale the $8,500 mark, the technical charts indicate.
Prices jumped close to 14 percent on Thursday and moved above the $8,000 mark for the first time since March, according to Bitfinex. The sharp rally was reportedly fueled by the unwinding of the short trades (also known as short liquidation).
Moreover, BTC margin shorts (sell BTC trades) on Bitfinex stood well above December highs. As such, there was always a risk of short liquidation and bitcoin price rise. That said, the margin longs (buy BTC) registered a decline as well, thus putting a question mark on the sustainability of gains.
However, volume analysis suggests the rally is here to stay. The total trading volume across all exchanges jumped above $8 billion yesterday, according to CoinMarketCap. Also, the trading volume on Bitfinex hit a two-week high.
Further, the price chart analysis indicates a short-term bearish-to-bullish trend change, so, the cryptocurrency looks set to extend the rally. As of writing, bitcoin is changing hands at $8,100 on Bitfinex – up 18 percent on a 24-hour basis.
BTC closed yesterday above $7,500, confirming a double bottom bullish breakout and the falling wedge reversal (bullish pattern). The breakout was also backed by strong volumes.
Momentum studies show a 5-day moving average (MA) and 10-day MA trending north, indicating bullish setup. The relative strength index (RSI) has moved above 50.00 (into the bullish territory).
So, the tide has turned in favor of the bulls, at least for the short-term.
- A short-term bullish reversal has been confirmed.
- BTC looks set to test resistance lined up at $8,500 (double bottom breakout target) and could extend gains to $8,620 (50-day moving average).
- A Minor pullback to $7,600 cannot be ruled out as BTC looks overbought as per the RSI on the hourly chart and 4-hour chart.
- Only a daily close below $7,000 would abort the bullish view.
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