Bitcoin looks prime for a test of its double bottom neckline, and a break higher could confirm a potential uptrend. The neckline is located at $7500 and the chart pattern is around $1000 tall, so the resulting climb could be of the same height.
The 100 SMA is still below the longer-term 200 SMA, though, so the path of least resistance is to the downside. In other words, the downtrend is still more likely to resume than to reverse. Then again, the gap between the moving averages is narrow, which suggests that an upward crossover is possible. Also, price has moved past these dynamic inflection points to signal a pickup in bullish pressure.
Stochastic is pointing down, though, so sellers could have the upper hand from here. RSI is also turning south so bitcoin could still follow suit.
Updates from the industry have been a bit more positive lately. For one, George Soros’ fund is preparing to trade cryptocurrencies, representing a shift from his earlier statement that bitcoin is in a bubble. Other hedge funds are apparently investing in the space as well, reviving investor confidence.\
For instance, the Rothschild family is also putting a stake in cryptocurrencies and their close ties with big financial institutions suggests that these large players are piling in.
Keep in mind, however, that India has recently moved to ban bitcoin so it wouldn’t be a surprise if other governments follow suit. Still, any change in tone from big investors regarding the cryptocurrency space could prove very bullish for bitcoin in the days ahead.
To top it off, the dollar has been on weaker footing following a dismal NFP report that dampened hopes of a faster pace of tightening for the rest of the year. Note that the Fed signaled scope for three hikes instead of bulls’ expectations of four.