Bitcoin looks primed for a move to $eight,000, but low trading volumes point to the risk of a bull trap.
The cryptocurrency broke through a crucial descending trendline (drawn by way of the Could 6 high to the Might 21 high) on Sunday, adding credence to last Tuesday’s bullish outside-day candle and signaling a quick-term bearish-to-bullish trend adjust.
Nevertheless, at the same time, day-to-day trading volume fell 1.77 % to $4.85 billion, according to CoinMarketCap. Additional, rolling 24-hour trading volume at the moment stands at $4.95 billion &ndash down 22.five % from the present quarterly typical of $6.38 billion.
Low volume is a lead to for concern for the bulls, as it is widely regarded as a sign that the market is approaching a peak that is, the rally will be quick-lived.
Therefore, a slight pullback observed nowadays does not come as a surprise. At time of writing, the cryptocurrency is trading at $7,591 on Bitfinex &ndash down two % from the prior day’s (UTC) close of $7,718.
The bullish outdoors-day candle followed by a bullish crossover between the five-day and 10-day moving averages (MAs), and an upside break of the falling trendline, indicate scope for a rally to $8,000.
Even so, the decline in trading volume over the final seven days puts a question marketplace on the sustainability of the corrective rally from $7,040 (May possibly 29 low) to $7,779 (Sunday’s high).
On the 4-hour chart, trading volume has picked up as rates fell back to $7,549 from the higher of $7,764.
The anemic trading volume for the duration of the value rally and the later improve in trading volume during unfavorable value action indicates a high probability of a downside break of the rising wedge pattern. In such a case, bitcoin risks falling back to final week’s low of $7,040.
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Published at Mon, 04 Jun 2018 10:00:18 +0000