BTCUSD was previously trading inside a short-term rising wedge formation before staging a strong upside break. This signals that bitcoin is far from done with its rallies, aiming for new record highs and possibly the $2000 handle next.
The 100 SMA is safely above the longer-term 200 SMA on the 1-hour chart so the path of least resistance is to the upside. Also, the gap between the moving averages is getting wider to reflect strengthening buying pressure.
RSI is heading north so BTCUSD might follow suit. Stochastic is also on the move up to reflect the presence of buying pressure. However, both indicators are in the overbought zones, signaling that buyers might need to take a break soon. If so, profit-taking could allow BTCUSD to pull back to the broken wedge resistance or even as low as support.
BTCUSD is currently enjoying support from several market factors, starting from the Japanese government’s decision to officially accept bitcoin as a legal form of payment to the surge in volumes in Japan and renewed expectations of the COIN ETF approval in the US. To top it off, indications of a slowdown in China and a potential stock market selloff are driving investors back to bitcoin. Potential risks from North Korea and Syria are also adding to downside pressure on traditional markets, drawing traders to the higher-yielding bitcoin as well.
The COIN ETF proponents have until May 15 to submit additional requirements before the US regulator announces its decision. An approval could mean a huge boost to market interest and volumes since it would make bitcoin accessible to more funds and individual investors. Analysts are pricing in stronger chances of approval this time, which might also set the stage for other cryptocurrency ETFs to get listed.
On the other hand, another denial could mean a sharp drop in profit-taking, but this might merely attract more buyers to get in at cheaper levels. Potential retracement levels are identified at $1600, $1500, and $1200 but a break below those areas could signal that a reversal may be in order.