Bitcoin rallied by more than 5% in a matter of hours following yesterday evening’s daily candle close.
It is now trading well above the $8,400 level and the 200 exponential moving average (EMA) on the daily chart, both of which have acted as bitter points of resistance over the past month.
What’s most important now is whether Bitcoin can close tonight’s daily candle above the $8,400 level, which would provide confirmation for the breakout.
As a continued surge to the upside seems most likely, the next logical stopping point would be the $8,830 level of resistance that suppressed price action in June last year before the eventual rally to $14,000.
The $9,250 level may also come into play, although arguably the most important price target for Bitcoin is above $10,400 as this would see the formation of a long-awaited higher high.
Bitcoin has stuttered since the $14,000 top in June, creating four clear and consecutive lower highs which, coupled with dwindling volume, are hallmarks of a bear market.
This means that a breakout above $10,500 would effectively end the cycle of lower highs, creating a chance to rally beyond last year’s $14,000 top.
However, while there is certainly a lot to be bullish about on the back of this morning’s breakout, investors should remain cautious until the breakout has been confirmed with a daily candle close, as Bitcoin has a historic habit of faking out price action at crucial stages.
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