The latest golden cross between main moving averages has Bitcoin traders questioning if it’s making a fast upside push to $10,500.
The price of Bitcoin (BTC) remains in a neutral region, trapped between two critical pathways. CoinMarketCap’s top-ranked digital asset has struggled to advance above $9,900 to reach the $10K mark for the past week.
Bitcoin made another attempt on Tuesday morning at $10,000 as the price rapidly jumped to $9,900 when some form of a hiccup in the BitMEX trading engine caused the exchange to cut out for almost an hour. The move didn’t last long, and the price stayed trapped below $9,800 for the rest of the day.
Yesterday the rate of mining difficulty fell by 6%. This means the miners who shut down their operations due to the reduction of the block reward and the current Bitcoin price can also find it easier to mine after adjusting the difficulty.
As already mentioned, Bitcoin is currently at a moment of ‘crossing the Rubicon’. If the asset can rally to $10,200 and close above this point, some traders believe that the path forward is bullish, especially if Bitcoin can move through $10,500. Some think a drop below the support zone of $8,900-$8,550 means anticipating sustained sideways market action for the remainder of 2020.
Looking at the daily chart, we can see that Bitcoin remains above the multi-week ascending trendline and continues to make higher lows. The price continues to intensify in a pennant presented over the 4-hour and 1-hour timeframe at present.
A strong volume breakout from this pennant would catapult the price to $10,200. A level that is also associated with the Bollinger Band’s top arm indicator.
Would a golden cross mean that there is a bullish trend coming?
Last week’s crypto media concentrated a lot on the upcoming golden cross between the 50-day and 100-day moving average that is predicted to occur over the next few days. Data reveals this will be the seventh convergence of the moving averages in Bitcoin’s history.
Traders usually perceive the intersection between the moving averages as a bullish signal. So as the strategy gets closer to completion, Bitcoin price might see a rise in buying pressure. More reason to expect the digital asset to break above $10K in the short term and test the $10,200 level.
A golden cross doesn’t always follow a good rally. Consider the latest example of the golden cross on February 19, followed by a disastrous drop to $3,750 less than a month later on March 13.
Traders are watching in the short term if Bitcoin can break out from the pennant and overtake the resistance zone of $9,900-$10,000. A move above $10,071 clears a path to rallying the digital asset to $10,200 if volume permits.
Knocking out the 2020 high at $10,500 will put the market above the long-term downward trend from the all-time peak of $19,800. A feat that many traders claim is evidence of a new bullish cycle beginning.
Repeated rejection at $9,900 and $10,000, from a bearish point of view, increases the chance that the price will drop to major support levels. A drop below $9,600 could see the price drop to $8,900-$8,550 support and below $7,438-7,200 support.