After a relatively quiet month in the cryptocurrency markets, volatility has returned, and Bitcoin has done nothing but shoot up. Data reveals that BTC could be poised for a further upward advance. Meanwhile, DGTX is consolidating within a narrow trading range as it prepares for a major price movement.
Bitcoin Breaks Out, Aiming For New Yearly Highs
Bitcoin stole the spotlight of the cryptocurrency market after the price action it has experienced over the past 48 hours. The flagship cryptocurrency went through a bullish impulse that saw its price rise by 10%.
The sudden upswing allowed BTC to move past the $10,000 resistance level. It also helped break a multi-year trendline that has prevented it from reaching its upside potential since the December 2017 all-time high of nearly $20,000.
Since then, this resistance barrier has been able to reject Bitcoin at each major peak. These include the late June 2019 high of $14,000, the mid-July 2019 peak of $13,200, the early August 2019 spike of $12,300, and the mid-February 2020 high of $10,500.
Now that the pioneer cryptocurrency sliced through the resistance trendline for the first time in two years, it could be poised to enter a new full-blown bull market.
From a short term perspective, such as its 1-day chart, Bitcoin appears to have more gas in the tank. Within this timeframe, its price action has been contained within an ascending parallel channel that developed during March’s Black Thursday.
Since then, each time BTC surges to the upper boundary of the channel, it pulls back to hit the lower limit, and from this point, it bounces back up again. This is consistent with the characteristics of a channel.
If the price history of the past three months repeats, the bellwether cryptocurrency could advance further up towards the middle or upper boundary of the ascending parallel channel.
The Fibonacci retracement indicator adds credence to this bullish scenario. This technical index estimates that if Bitcoin is able to turn the $10,500 resistance wall into support, there isn’t any major barrier to prevent it from rising towards the 127.2% Fibonacci retracement level at $12,250.
It is worth mentioning that high levels of volatility in the market seen over the past few days sent investors into “greed,” according to the Crypto Fear and Greed Index. But greed is not necessarily a good sign as one of the most successful investors in the world Warren Buffett once said:
“Be fearful when others are greedy and greedy when others are fearful.”
For this reason, market participants must pay close attention to the 78.6% Fibonacci retracement level that sits at $9,100. A sudden bearish impulse that sends Bitcoin below this critical support level could jeopardize the bullish outlook.
Under such circumstances, the next supply barriers to watch out for are the 61.8% and 50% Fibonacci retracement levels. These support zones sit at $8,000 and $7,250, respectively.
DGTX May Soon Follow Bitcoin’s Lead
While Bitcoin is letting loose, the DGTX/BTC trading pair continues consolidating within a narrow trading range. The price action of this altcoin has been contained between the 4,300 satoshis support level and the 4,880 satoshis resistance since mid-May.
Throughout this stagnation phase, the Bollinger bands were forced to squeeze on DGTX’s 12-hour chart due to the low levels of volatility. Squeezes are typically succeeded by wild price movements. The longer the squeeze, the higher the probability of a strong breakout.
Since this technical indicator does not provide a clear path of where DGTX could be headed next, the area between the aforementioned support and resistance levels is a reasonable no-trade zone.
A decisive 12-hour candlestick close above or below this area will determine the direction of the trend.
In the meantime, it seems like the DGTX/BTC trading pair is about to bounce off support. The Tom Demark (TD) Sequential indicator is presenting a buy signal in the form of a red nine candlestick within the same timeframe.
The bullish formation suggests that DGTX could surge for one to four candlesticks. But if the buying pressure is strong enough, it could trigger a new upward countdown.
Regardless of the outlook presented by the TD setup, the area between 4,300 satoshis and 4,880 satoshis remains a no-trade zone. Therefore, one must wait for a break of support or resistance before entering any trade to avoid getting caught on the wrong side of the trend.
Upon the break of the resistance level, for instance, the next major barrier is the 38.2% Fibonacci retracement level that sits at 5,700 satoshis. Conversely, if the selling pressure increases and DGTX breaks below support, it could target the 78.6% Fibonacci retracement level at 3,800 satoshis.
Understanding the importance of the support and resistance levels mentioned above for both Bitcoin and DGTX could allow anyone to minimize risk while profiting from the next significant price movement of any of these cryptocurrencies.