Bitcoin has retraced slightly from the one-year high of $8,940 reached earlier today.

  • Any pullbacks could be short-lived, however, as buying pressure is currently the strongest in over five months, according to a weekly chart indicator.
  • A pennant breakout on the daily chart indicates scope for a rally to $10,000 in the near-term. On the way higher, BTC may encounter resistance at the key Fibonacci level of $9,442.
  • The bullish case would weaken if prices fall back below $8,000 in the next day or two.

Bitcoin (BTC) has pulled back from 12-month highs hit earlier today. However, the bulls are still firmly in control, with the price holding well above key support at $8,390.

The cryptocurrency market leader jumped to $8,940 on Bitstamp at 01:00 UTC today, the highest level since May 11, 2018.

The rally since then has faded somewhat, with the cryptocurrency currently trading at $8,750, representing a 9 percent gain on a 24-hour basis.

The $200 drop from intraday highs seen over the last nine hours is likely nothing more than a bull breather, often seen following a notable price gain. After all, BTC rose by 8.29 percent on Sunday – the fourth biggest single-day gain of May.

More importantly, the bulls finally managed to force a convincing break above $8,300, having failed at least three times in the preceding 11 days to hold on to gains above that psychological level.

Prices also found acceptance above the July 2018 high of $8,500 yesterday.

So, the rally from lows below $6,000 looks to have resumed and only a quick fall back below $8,000 would weaken the bullish case.

Daily chart

BTC closed well above the May 16 high of $8,390 on Sunday, confirming a pennant breakout – a continuation pattern that usually accelerates the preceding bullish move.

This type of breakout is often followed by a move upwards of roughly the length of the pennant’s “pole” (the height of the preceding bull move) – in this case from $5,562 to $8,390).

BTC, therefore, has scope to rally at least to $10,000 (psychological resistance) in the near-term.

Supporting the bullish case is the Chaikin money flow index of 0.24 – the highest reading since April 10 – meaning that buying pressure is its strongest in nearly six weeks.

Further, the 5- and 10-day moving averages (MAs) are trending north, indicating a short-term bullish setup. As a result, these averages, currently located at $8,288 and $8,048, respectively, and may reverse price pullbacks, if any.

Weekly chart

BTC’s four-week winning run is backed by five-month highs on the Chaikin money flow index – that is, buying pressure is currently the strongest since mid-December,

The 5- and 10-week MAs are also sloping upwards in favor of the bulls.

While the relative strength index (RSI) is reporting overbought conditions with an above-70 print, the cryptocurrency is showing no signs of bullish exhaustion. The RSI’s overbought signal therefore stands invalidated.

To conclude, BTC will likely break above $9,000 in the short-term and may rise to $9,442 – the 38.2 percent Fibonacci retracement of the sell-off from the December 2017 high to December 2017 low.

It’s worth noting that prices are currently up more than 65 percent on a month-to-date basis. Pullbacks due to profit taking are usually observed following such stellar rallies.

As a result, the possibility of BTC revisiting the former resistance-turned-support zone of $8,390–$8,000 before rising to $9,442 cannot be ruled out.

On a year-to-date basis, bitcoin is now up 136 percent.

The views and opinions expressed in the article Bitcoin Price Backs Off 12 Month Highs, But Bias Remains Bullish do not reflect that of 48coins, nor of its originally published source. Article does not constitute financial advice. Kindly proceed with caution and always do your own research.

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