BTC-USD Breaching $600 Handle, $700 Within Reach?

BTC-USD Breaching $600 Handle, $700 Within Reach?

After relatively muted trading over the past few days, BTC-USD has jumped close to the critical $600 psychological level in today’s trading session.

The reversal initially started on Friday following weak economic data from the US, which negatively impacted sentiment toward the US Dollar. The Non-Farm Payrolls showed 151,000 job additions versus a forecast of 180,000. BTC-USD was able to make a reversal, as shown below, with bullish momentum intensifying today.

As a result of the weaker than expected labour market growth, an interest rate hike from the Federal Reserve now looks dead in the water for 2016. Investors will look to move away from the US Dollar toward other assets, with bitcoin being the most favourable in a time of uncertainty with regard to the future path of monetary policy.

Another positive development emerged from the Bitfinex scandal. After a string of bad news, the company has paid out some of the victims for the first time compensating for the loss. By purchasing 1 percent of all BFX tokens available, which were purchased above the $1 market price, Bitfinex has managed to hand out a reimbursement to their customers.

The BFX token has also established all-time highs, trading just above $0.50 at the time of writing. The exchange market is indicating that there is just above a 50 percent chance as to whether Bitfinex will be able to return the entire $64 million in lost funds. This growing confidence in the Bitcoin ecosystem could be a motivating factor behind the recent price surge and could continue to feed bulls in the market.

A longer-term bullish breakout is underway as shown by the Renko chart below, with BTC-USD looking to regain its previous range prior to the Bitfinex hack. For the 4-hour timeframe, we see that the currently the market is in an uptrend and a sustained break above the fractal at $596.18 will expose the $700 psychological level.

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The chart below shows that if BTC-USD manages to break through the resistance zone between $596.18 and $603.00, the upside will be extended as high as $680 to $700. At the 4-hour timeframe, the Ichimoku cloud has turned from red to green suggesting a switch to a bullish phase has just started. Moreover, the cloud is trending higher suggesting there is a lot of momentum behind this move. The Awesome Oscillator is also signalling strong bullish momentum.

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Looking at the daily price action below, we see that BTC-USD is within the Ichimoku cloud and confined in equilibrium. A break outside of the Ichimoku cloud will give further clarity on the longer-term direction. Given that bitcoin is trading within this equilibrium zone, this means that an imminent break of the Ichimoku cloud in either direction is possible going forward.

Nevertheless, the momentum is leaning toward a bullish scenario as shown by the Awesome Oscillator and the most recent fractal sell level at $582.46. The closing price for Saturday will most likely be above this important fractal level, confirming a change in the underlying structure of the market and foretelling further appreciation in BTC-USD.

Anticipate a return to previous highs around $680-$700 following a successful breakout above the Ichimoku cloud, which currently provides a ceiling around $622.00, but falls to $596.00 in the next few days.

Therefore, from the chart below, it seems to be that bitcoin is getting ready for a bounce higher, as the Ichimoku cloud will provide a support zone going forward.

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