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Technicals suggest Bitcoin's rally may have more room to run
[NEW YORK] Bitcoin's starting the week on the right foot after its worst week since November. Now, a number of technical indicators are signalling the potential rally may have further room to run.
On Monday, amid a rally of more than 4 per cent to US$8,886, Bitcoin retook its lower band, according to the Trading Envelope Indicator, a gauge that smooths moving averages to map out higher and lower limits. It may potentially test the upper limit, which could bring the coin to around US$10,600. Bitcoin posted a similar move in mid-December, when it breached its lower band and rallied more than 10 per cent in the ensuing week.
In addition, Bitcoin's Stochastic line is nearing the oversold level of 30, potentially further bolstering the chances of a short-term rally. Assets are considered oversold if the gauge drops below 30 and overbought if the it exceeds 70.
The largest cryptocurrency is coming off its worst week since Nov 24, having dropped almost 14 per cent through Friday. Arguments that the largest digital token acts as a place of shelter during market turmoil diminished last week as Bitcoin slumped amid an intense bout of equity-market selling. Still, many investors are betting it will continue to recover as the coronavirus starts to impact global growth prospects.
"Conversations are resurfacing about Bitcoin being perceived as a safe haven asset during global instability," said Don Guo, chief executive officer of Broctagon Fintech Group. "You can see why - crypto isn't bound by international borders or trade relations and, if this continues, we could not only see the price of Bitcoin skyrocket."
Bitcoin was up 4.1 per cent as at 9.40am in New York on Monday to trade around US$8,863. Other cryptocurrencies also gained, with EOS rising more than 3 per cent and Bitcoin Cash advancing 4.1 per cent.