Bitcoin is preparing for a breakout, charts indicate
As the world’s leading cryptocurrency, bitcoin (BTC), weathers a storm of indecision, market participants eagerly watch for signs of an impending breakout.
In the second week of March, BTC reached a 90-day high of $29,159 and has been trading sideways ever since. Despite the continuous push from bears, it has held its ground, trading at $28,321 as of April 10.
Let’s delve into the current state of BTC and explore whether it’s on the brink of a breakthrough.
Blast from the past: April 2019 deja vu
The current indecision in bitcoin is reminiscent of April 2019, when a similar three-week indecision occurred after a significant green candle.
Back then, BTC had just begun to recover from a bear market, and its price had surged from around $4,000 to over $5,000 in a few days.
Market participants were unsure of the next move as the bulls and bears struggled to gain control.
Eventually, the bulls prevailed. Bitcoin’s price embarked on an impressive rally that saw it reaching nearly $14,000 by June 2019.
As history seems to repeat itself, watch closely to see if the current market indecision will resolve similarly.
EMA tightness: a sign of upcoming volatility
A recent analysis of bitcoin’s exponential moving averages (EMAs) on the 4-hour chart shows that they have been tighter than before.
As EMAs from diverse timeframes begin to converge and tighten around a specific price point, the asset’s price has been restrained within a narrow range for an extended period.
This pent-up pressure within the limited boundaries ultimately leads to a breakout or heightened volatility, as the market can no longer sustain the constricted price movement.
Hence, the recent EMA-tightness signals that a breakout is expected and could be on the upside if the Federal Reserve does not announce anything unfavorable this week.
Closing gaps and exiting the range: a pivotal moment for bitcoin?
The current market dynamics hint at a potential shift in BTC’s trajectory, with two crucial factors playing a role: the filling of price gaps and the prospect of leaving its trading range.
Price gaps at $20,000 and $28,000 have been closed, drawing attention to the next critical level — the $35,000 gap. Achieving this milestone could signal a breakout and heighten investor enthusiasm.
Meanwhile, BTC has been trapped within a limited-price corridor for weeks, with bulls and bears at a stalemate.
One analyst believes that bitcoin is on the cusp of exiting its range, marking a decisive move that could determine its direction in the coming months.
The combination of these factors creates an atmosphere ripe for potential market movement.
Are the bears losing ground?
The directional movement index (DMI) shows that bears are getting weaker and weaker with each bitcoin weekly close. This could signal a potential shift in the market, giving way to a bullish trend.
Moreover, despite multiple rejections, one analyst anticipates that many individuals have set their short-stop losses above $29,200.
He believes these stop losses will be triggered before any downward movement, leading to a further upward movement toward the highs.
Bitcoin price: what to await
In conclusion, the current state of BTC is filled with indecision and anticipation. However, multiple factors suggest that a breakout might be imminent.
With tightening EMAs, filled gaps, weakening bears, and potential short-stop loss triggers, investors should keep a close eye on the market.
Whether the breakout is bullish or bearish, one thing is certain: the crypto giant has seemingly woken up and is bound to make some noise.