Bitcoin Buying Pressure Hits 2-Month High as Price Tops $11.4K
The leading cryptocurrency by market value rose to $11,430 at 10:45 UTC on Bitstamp to hit the highest level since March 6, 2018, surpassing the previous multi-month high of $11,247 seen on Sunday.
The average price across major exchanges, as seen on CoinDesk’s Bitcoin Price Index, also hit a 15-month high of $11,437 earlier today.
The rally looks set to continue toward $12,000 too, as the Chaikin money flow indicator (which shows buying and selling pressure by combining price and volume into one metric) is currently hovering at 0.32 – the highest reading since April 2.
That said, at the current price of $11,400, BTC is up 176 percent on a quarter-to-date basis and 34 percent on a month-to-date basis. Bulls usually take a breather following such stellar rallies. As a result, a sudden correction cannot be ruled out.
Any pullbacks, however, will likely be transient, as more long-term technical studies have flipped in favor of the bulls. Further, the narrative that Facebook’s fiat and bond-backed cryptocurrency Libra will end up boosting bitcoin’s appeal is becoming entrenched within the investor community.
Joe Kernen, one of the hosts of CNBC’s Squawk Box, is the latest to join the bandwagon of observers calling Facebook’s Libra a net positive for bitcoin.
As can be seen above left, the Chaikin money flow index is trending north and is currently at the highest level since the beginning of April. The indicator turned positive in March, signaling a bearish-to-bullish trend change.
The relative strength index (above right) is reporting overbought conditions with an above-70 print, but is still well below the high of 86.00 seen in mid-May. Further, the overbought readings on the RSI would gain credence only if the price shows sign of bullish exhaustion, as discussed yesterday.
As of now, the bulls are showing few signs of slowing down.
The ascending channel breakout seen on the 4-hour chart indicates a continuation of the rally. The RSI has breached the falling trendline, invalidating the bearish lower highs (bearish divergence) pattern.
The breakout is also backed by a surge in buy volume, as represented by the green bar (marked by arrow).
Therefore, the path of least resistance is to the higher side and prices could rise to resistances at $11,688 (March 2018 high) and $11,780 (February 2018 high).
Watch out for a repeated failure at $11,394 – 50 percent Fibonacci retracement of the bear market drop – as that could yield a pullback to the hourly chart support of $10,550.