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article imageBitcoin breaks above $5,400 in a bullish move

By Ken Hanly     Apr 22, 2019 in Technology
Bitcoin seems to be moving upward again as today it has breached the $5,400 level albeit only briefly. An article by Omkar Godbole at CoinDesk today argues that the 14-week relative strength index (RSI) movement is indicating a possible bullish reversal.
Godbole's analysis
The 14-week relative strength index (RSI) of bitcoin (BTC) has risen beyond the key resistance range of 53.00 to 55.00 which confirms the longer-term bullish reversal that was signalled by a falling channel reversal seen two weeks ago. In consequence, bitcoin may rise as far as the resistance level of $6,000 level within the next couple of months. However, there could be a pullback to the 200-day moving average (MA) presently at $4,500 before such a rise happens. The relative strength index (RSI) is explained in this article.The hourly chart shows that bitcoin is threatening a breakout from a falling channel. If this happens, the price could test recent highs of $5,460 within the next day or so.
With the 14 week RSI showing a probable long-term bullish reversal, bitcoin could continue its rally to $6,000 within the next few months as mentioned earlier. The indicator has jumped back into bull market territory. This strengthens the long term bullish reversal shown by bitcoin's breaking the bearish lower highs and lower lows pattern back on April 2. As the Godbole article went to press bitcoin was trading near to $5,300 on Bitstamp with just a .20 percent gain over the last 24 hours. Godbole thinks there may be a pullback before prices rise once again.
Chart analysis
The weekly chart shows the 14-week RSI staying above the 53.00 to 55.00 resistance range a mentioned previously. A reading above 50:00 indicates bullish condition but the range represents a make or break situation as evidence in the 2.5 year bull market that climaxed in December of 2017 with a record high near $20,000 for BTC. During the long bull market at no time were the bears able to drive the RSI down below 53.00. After the break of the RSI below 53.00 in January of 2018 there ensued a long bear market that saw the price slide back to lows near $3,100 last December. During the five months to October 2018 there were repeated unsuccessful attempts to break through 53.00 these failures were followed by a large drop below $6,000 on November 14 last year.
In conclusion it looks as if the fact that BTC has found acceptance above the 53.00 RSI level looks as if the longer term bullish to bearish trend confirmed earlier has continued strength and could rise at least to the $6,000 resistance level during the following months.
Such a trend is also signaled by the 5 and 10-week moving averages which slope upwards favoring the bulls for the first time since back in December of 2017. These average now at $5,045 and $4,505 respectively could act as supports given any pullbacks in the future.
The daily chart shows signs of bullish exhaustion. BTC created a doji candle last Friday and remained more or less flat-lined over the weekend. However, a deeper pullback would be strengthened only if the recent low $4,934 is breached but there is no sign of that happening. Nevertheless such a break cannot be ruled out. Markets often test the resolve of bulls consequent to a major breakout. As an example the 100-day moving average hurdle that was breached on February 19 this year was tested several times up to March 4 when there was finally a sustained move higher. BTC could do the same by dropping back to the 200-day moving average now at $4,482 before moving back up again.
The one hour chart shows that BTC is flirting with the upper edge of a bearish channel. Last week the bearish divergence of the RSI and a falling wedge breakdown resulted in repeated support at the $5,170 level last week. As a result, the channel breakout appears likely. This could be followed by a test of the recent high of $5,466. However, a break below the $5,170 level would favor the price dropping to test the recent low of $4,912.
Present situation
24 hours ago BTC was trading at $5,250 according to CoinDesk data. Since then the low has been just $5,243 but the high has been up to $5,423. At 22:20 Central Daylight Time the price was still $5,419 quite close to the high and not that far from the recent high of $5,466 mentioned by Godbole. This is a rise of well over 3 percent in 24 hours or $169. There is no sign at present of a drop back before advancing further. The trend right now appears upward. The present price of bitcoin and the top cryptocurrencies can be found here.
At about 22:30 Central Daylight Time only two of the top 20 cryptocoins were losing value. All the others have price increases, a few by several percentage points.
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