Bitcoin coils up above $9,000 before violent move

Bitcoin looks like it may move back towards $10,000 over the next week after the formation of a stern level of support above $9,000

Bitcoin has shown continued signs of strength following last weekend’s tremendous 40% rally to the upside, with price continuing to hover above $9,000.

The 100 exponential moving average (EMA) on the daily chart is currently being used as support, with the nine previous daily candles all closing above this critical level.

Despite remaining above $9,000 for the past week, Bitcoin needs to rally above the level of resistance at $9,350 in order to drive price back towards the key psychological level of $10,000.

But there still remains a threat to the downside. If Bitcoin begins to close daily candles below the 100 EMA and below $9,000, it could trigger a massive sell-off with price targets at $8,400, $7,900, and $7,350.

This would almost certainly lead to a death cross on the daily chart, which was narrowly avoided after last week’s 40% rally from the $7,350 lows.

A daily death cross has happened just twice since 2014, with Bitcoin’s price dropping by 60% and 72% respectively on both occasions.

The relative period of calm over the past week can be seen as volatility coiling up before another violent move, which will be exaggerated by a wealth of liquidations on derivatives exchanges BitMEX, Deribit, ByBit, and Binance Futures.

If the $9,350 level of resistance can be taken out with conviction, price can be expected to reach $10,500, $10,920, and even the historic level of resistance at $11,800.

From a fundamental standpoint, crypto exchanges suffered a series of blows last week, with BitMEX leaking thousands of customer email addresses while Deribit endured an index malfunction that caused a ‘flash crash’.

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