Bitcoin and other cryptocurrencies are higher across the board today with some solid gains of around 10% or so at the time of this writing. What has changed and are prices going to stay supported?
Cryptocurrencies have been coiling for several weeks and needed just a little shove to move prices sharply as many people held on to their longs after the big correction, while fresh buying took place during that time. So, technical buying following the breakout is undoubtedly one reason behind the sharp rise.
It appears like the pace of buying has been rising ever since last week's "B-Word" conference with Elon Musk and Jack Dorsey. In addition, speculation has been growing that Amazon could be accepting Bitcoin payments later this year, which would be massive news and a big catalyst behind further gains, if the story turns out to be correct.
Are we also seeing some pre-emptive buying ahead of Tesla’s earnings today? It could be that some speculators are anticipating pro-crypto remarks from Tesla CEO Elon Musk or his team when the electric car maker produces its quarterly results after the stock markets close tonight. So do watch out for that possibility.
Whatever the fundamental reason it, it is clear to see why Bitcoin jumped from a technical point of view:
Source: ThinkMarkets and TradingView.com
Prices had been coiling for several weeks and when they finally broke above the bearish trend line a few days ago, we have been seeing a few back-to-back “green” or in my case white candles. It is clear that some speculators relying on price action must have decided it was the right time to get back on board.
The key question is where do we go from here? Key resistance around the $40K area (shaded on the chart) remains intact for now. We need to see a clean break above this zone to tilt the bias completely back to full-on bullish. Until and unless that happens, traders will need to proceed with a higher degree of caution as this could turn out to be a short-lived spike.
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