Bitcoin’s widening trading range and a move above the August high suggests more gains ahead.
The six-month corrective trend in altcoins seems to have ended.
Earlier this week, analysts at the Bitfinex crypto exchange said August’s $65,200 high is the level to beat for bitcoin (BTC) bulls.
The breakout happened Thursday and how. Bitcoin jumped over 3%, the most in nine days, to the highest since July 31 with a wider trading range than Tuesday, according to charting platform TradingView.
In other words, the cryptocurrency formed a bullish “outside day” pattern, signaling an end of the recent consolidation below $65,000 and a resumption of the rally from lows under $53,000.
“The outside day can form midway in a price trend, just like flags and pennants. Since outside days act as continuation patterns, expect the breakout to be in the same direction as the inbound price trend,” investor and technical analysis expert Thomas N. Bulkowski wrote in his book “Encyclopedia of Chart Patterns.”
The breakout flipped the August high into a support level, shifting focus to the next resistance closer to $70,000. The resistance is identified by the trendline connecting highs registered in March and June.
Bitcoin has gained almost 1% so far on Friday, close to $66,000, validating the bullish breakout. The positive bias would be invalidated if prices fell below Thursday’s low of $62,805.
While bitcoin is still stuck in a broad descending channel, the cumulative market capitalization of alternative cryptocurrencies (altcoins), or tokens other than market leaders bitcoin and ether, has broken out of a six-month corrective trend.
The breakout points to a potential “alt season” ahead, a period characterized by smaller tokens outperforming BTC and ETH.
