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Bitcoin has bounced up from historically strong price support, raising the prospects of a renewed push toward recent highs above $13,000.
The cryptocurrency market leader had been on the defensive in the Asian trading hours today, looking set for a drop below $11,000 after a failure to capitalize on a falling wedge breakout seen yesterday.
The move below $11,000, however, remained elusive with the cryptocurrency finding takers around the three-day chart 10-candle moving average (MA) support – then located at $11,150 – and rose to a high of $11,797 soon before the press time.
The $600 bounce from the 10-candle MA could be a sign the pullback from the weekly high of $13,200 has ended.
The 10-candle MA has consistently acted as strong support, reversing corrections throughout the rally from February lows near $3,500 to June highs near $13,800, according to Bitstamp data.
So, if history is a guide, BTC could rise all the way back to the July 10 high of $13,200 in the next few days.
As of writing, BTC is changing hands at $11,673 on Bitstamp, representing a 1.3 percent gain on a 24-hour basis. The 10-candle MA on the three-day chart is now located at $11,167.
This year, BTC first found acceptance above the 10-candle MA on Feb. 9 and the technical line has acted as strong support ever since.
For instance, the cryptocurrency traded in a sideways manner
along the average line for almost a month before witnessing a 21 percent rise
to levels above $5,000 in early April.
The 10-candle MA also fueled strong price gains in early May and June (marked by arrows). What’s more, the sell-off from the June 26 high of $13,880 ran out of steam near the key average on July 2 and prices rose back to $13,200.
All-in-all, there is a strong reason to believe that the latest bounce from the 10-candle MA will be extended further toward recent highs.
BTC closed below $11,550 yesterday, confirming buyer exhaustion signaled by the previous day’s bearish outside day candle. Even so, the cryptocurrency is better bid at press time, as mentioned above.
The focus would shift back to the bearish outside reversal if prices fall back below the 10-candle MA, currently at $11,167. In that case, the support at $10,769 (July 5 low) could come into play.
The outlook would turn bearish only if prices print a UTC close below $9,615 (July 2 low), invalidating the bullish higher lows pattern.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; charts by Trading View