Bullish Signals Hint at Bitcoin Price Breakout

Still stuck in a narrowing price range, BTC could soon rise to resistance above $8,000 if the bulls are able to leap the 50-week moving average hurdle.

Defense of $7,000 last week and the 9.3 percent rise from the last week's low of $7,040 have neutralized the immediate bearish outlook and got investors talking about a possible rally to pennant resistance at $8,870.

While that target may appear far-fetched, it may be put to test if bitcoin can first scale the key 50-week moving average resistance in a convincing manner.

As seen in the chart above, BTC narrowly avoided a downside break of the narrowing price range last week, turning higher from $7,040.

While it's still too early to say that bitcoin is now aiming for $8,880, the probability would rise sharply if we see an aggressive run above the significant resistance of the 50-week MA. Such a move would invalidate the long-run bearish reversal indicated by the weekly close in the third week of May below the moving average.

A move above the 50-week MA would also need to be backed by a solid rise in trading volumes to break out of the pennant.

In a promising sign for the bulls, the daily chart below shows that bitcoin is positioned for a convincing break above the 50-week moving average hurdle.

A break above the immediate resistance at $7,780 could yield a quick rally to $8,000.

The bullish move would also add credence to "6th of the month" theory, which had hinted at a major bullish reversal based on an alternating monthly cycle.

BTC looks set to close this week above the 50-week MA of $7,819.