In recent days, there was a golden crossover between key moving averages. However, Bitcoin traders wonder if a strong bullish move to USD 10,500 is underway.
The price of Bitcoin (BTC) remains in a somewhat neutral zone, caught between two high-consequence paths. In recent weeks, the top-ranked digital asset on CoinMarketCap has struggled to exceed USD 9,900 to attack the USD 10,000 mark.
On the morning of May 19th, Bitcoin made another attempt to hit USD 10,000. At that time, the price quickly rose to USD 9,900 as some sort of setback in BitMEX’s trading engine caused the exchange to stop working for nearly an hour. The move did not last long and, for the rest of the day, the price stayed below USD 9,800.
That day, the mining difficulty rate fell by 6% since some miners closed their operations due to halving and Bitcoin’s current price. They may also find it easier to mine Bitcoin after the difficulty adjustment.
Some traders believe that if the asset can go up to USD 10,200 and close above this level, the path ahead is bullish; especially if Bitcoin can hit USD 10,500. Others believe that a drop below the support zone from USD 8,900 to USD 8,550 means that prolonged side price action is expected for the rest of 2020.
The daily chart shows that Bitcoin continues to hit higher lows and stays above the multi-week rising trend line. Currently, the price continues to narrow into a pennant seen within 4 hours and 1 hour.
A sharp break in volume for this pennant should boost the price to USD 10,200, a point that is also aligned with the upper division of the Bollinger Band indicator.
Golden Cross and Coming Price Rises
Traders typically interpret the cross between moving averages as a bullish signal. Therefore, as the move nears its end, Bitcoin’s price could see a surge in buying pressure. This is a possible reason to expect the digital asset to exceed USD 10,000 and test the USD 10,200 level in the short term.
It is important to keep in mind that a sharp rise does not always follow a golden cross. For example, the golden cross of February 19th occurred less than a month before the catastrophic drop to USD 3,750 of March 13th.
In the short term, traders are looking forward to seeing if Bitcoin can break the pennant and exceed the resistance zone from USD 9,900 to USD 10,000. If the volume allows, a move above USD 10,071 will clear the way for the digital asset to climb to USD 10,200.
If 2020 high is exceeded at USD 10,500, the price would be above the long-term downtrend line since the all-time high of USD 19,800. Many traders consider this the confirmation of the start of a new bullish cycle.
From a bearish point of view, the repeated rejection of USD 9,900 and USD 10,000 increases the chance that the price will fall to significant support levels. A drop below USD 9,600 could cause the price to fall to the support level from USD 8,900 to USD 8,550, and below it, from USD 7,438 to USD 7,200.
By Alexander Salazar