Bitcoin Looks North After Biggest Single-Day Rise in More Than a Month
Bitcoin appears to have found its footing after Wednesday’s near 10% rise, the biggest gain since July 17, and may soon challenge the upper end of its months-long trading range of $30,000 to $40,000.
“We are now short-term bullish to the topside against the $30,000 region triple-bottom with strong bullish divergence,” Singapore-based QCP Capital said. “In addition to this, the market is short gamma to the topside – a break above $35,000-$36,000 could trigger a quick short squeeze towards the $40,000-$42,000 range top.”
Bitcoin bears have failed at least three times in the past two months to establish a foothold under $30,000. While prices did close (UTC) below the key support earlier this week, Wednesday’s jump to $32,000 negated the bearish breakdown.
The persistent defense of the $30,000 mark has taken the shape of a so-called triple bottom pattern on the daily chart, which also shows a bullish divergence of the relative strength index (RSI). The pattern occurs when the indicator prints higher lows, contradicting weakness in price, and is a signal of seller exhaustion and scope for a price bounce.
The 50-day simple moving average (SMA) at $34,500 may offer immediate resistance. According to Katie Stockton, founder and managing partner of Fairlead Strategies, a breakout above the 50-day SMA would target the 200-day SMA near $44,000.
Patrick Heusser, head of trading at Crypto Finance, also pointed to $35,000 as a critical level. “Orderbook flow looks good, but a lot of stale selling orders are coming up in the $35,000 area, which still need to be cleared,” Heusser said.
Lastly, market participants who went “short gamma” by selling call options – or insurance against bullish moves – at or above $35,000 over the past few weeks may resort to hedging, that is buying spot or futures, if prices rise above $35,000.
That, in turn, may bolster the bullish move, possibly yielding a test of $40,000-$42,000, as anticipated by QCP Capital. Being short gamma means being an option writer (seller) regardless of whether call or put. Traders typically write options when they expect the underlying asset to see low-volatility consolidation.
Bitcoin is currently trading near $31,800, representing a 1% drop on the day, according to CoinDesk 20.
The cryptocurrency rose from $29,800 to over $32,000 yesterday on a string of bullish news. The day ended with tech entrepreneur and provocateur Elon Musk saying that his aerospace company, SpaceX, holds bitcoin. Musk also said that he owns bitcoin, ether, and dogecoin and added that Tesla might relist bitcoin as a payments alternative.Source