Does this bitcoin rebound have longevity

Bitcoin has been rallying sharply over the past two weeks, gaining around 40% from the $6000 mark. However, with the creation of lower highs throughout 2018, there is a risk that we will see another turn lower in the near future.

Source: Bloomberg

Bitcoin has been on the rise over the past fortnight, with the price pushing through trendline resistance to reach the 61.8% retracement. That rally through the trendline certainly signals a slowdown in the decline of the cryptocurrency, yet the question over whether this marks the bottom remains to be answered. The downtrend that has been in place throughout 2018 remains, despite this trendline break, yet it is clear that the rally through $7776 paved the way for a short-term period of upside.

The daily chart highlights that we have seen a substantial amount of support at $6000 throughout this year-to-date. Thus it was no major surprise that the price of bitcoin managed to reverse higher from that level, driving a 41% gain from the June lows.

Now that we have seen the price push into the 61.8% retracement, the trend of lower highs has a chance of coming back into play once more. There is a chance that we could see a deeper retracement into the 76.4% level ($8967), but there is also a chance that we will see the price continue upwards and through $9956. Such a break above that early-May swing high would spark a bullish wider view for bitcoin. Until then, the trend of lower highs and flatlining lows (descending triangle) remains in play, and therefore there is a possibility we could start seeing selling come back into play before long.

Interested in trading other cryptocurrencies? We want to know which crypto asset you are most interested in for our IG Community poll. Have your say and help shape the future of IG.

Bitcoin trading

You don’t need to own cryptocurrencies to trade on them.
Find out more about trading on bitcoin with IG.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.