Bitcoin surged over 40 percent in the last few days after Chinese President Xi Jinping said that his administration would embrace on blockchain technology. Now, BTC is at a pivotal point that could lead to new yearly highs or a correction to $9,000 or lower.
Bitcoin technical analysis
Based on its 3-day chart, Bitcoin appears to be trading within a descending parallel channel that formed since Sept. 26 following the peak at $13,800. Under this time frame, every time this cryptocurrency reaches the bottom of the channel it bounces off to the middle or the top. But, when it reaches the top, it falls back to the middle or the bottom.
BTC is currently trading at the top of the channel after a strong bounce off the bottom. At the current price level, Bitcoin could either break out of the descending parallel channel or pull back once again to continue consolidating within it.
A spike in volume could lead to a breakout, which will validate a major bull flag that is developing on BTC’s 3-day chart. This is considered a continuation pattern that formed after an upward movement that took Bitcoin to nearly $14,000, known as the flagpole, and was succeeded by the current consolidation period, known as the flag, which could result in a breakout on the same direction of the previous trend.
Upon the breakout point, the bull flag predicts a 70 percent target to the upside. This is determined by measuring the height of the flagpole, which could take BTC to hit $16,500.
Nonetheless, Bitcoin is facing a major resistance cluster on its 1-day chart given by the 100 and 150-day moving average. If the price of this cryptocurrency is rejected by these moving averages, then a pullback to the 200-day moving average ($9,000) is extremely likely. This could imply that BTC will continue consolidating within the descending parallel channel.
At the moment, it seems like a move to $9,000 could actually be beneficial for Bitcoin’s bullish trend. This downward movement would fill a price gap that is currently open on the CME Group Bitcoin futures contracts chart.
CME Bitcoin futures gaps
Price gaps symbolize imbalances created in the market and, at their most basic form, represent a large mismatch between the number of buy and sell orders that have been filled. These usually occur on speculative assets across a variety of markets when there is high volatility after trading hours are closed.
The CME Group Bitcoin futures contracts are open from Sunday to Friday from 5:00 PM until 4:00 PM Central Time with a daily 60-minute break at 4:00 PM. During the most recent rally that saw Bitcoin rise more than 40 percent, a gap was left behind while CME’s trading hours were closed.
This price gap is between $8,715 and the current price of Bitcoin, which is approximately $9,700, at the time of writing. There is also another one that occurred the weekend of Aug. 9, representing a $100 gap between $11,795 and $11,695. Now, it remains to be seen which gab will be filled first.
Overall sentiment
The crypto community appears to have turned bullish after the recent price action that took Bitcoin to a high of $10,480 on Oct. 26. Yet, the previous technical analysis tells that there is still an obstacle to overpass. BTC must close above $9,850 for it to resume its bullish trend, but failing to do so could send it back below $9,000.
Even though a downward movement could prolong the bullish outlook, it could allow BTC to fill a price gap that can be seen on the CME Group Bitcoin futures contracts chart.
The post Bitcoin climbs to $9,700; where will it go from here? appeared first on CryptoSlate.
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