Bitcoin price eyes $40k, above 50 DMA for first time since May

BTC shot to highs of $39,770 on Coinbase, crossing above the 50-day moving average for the first time since May

Bitcoin almost cracked the $40k mark as its price surged on Sunday and Monday morning to cross the $39,000 level for the first time since 15 June. On US exchange Coinbase, buy orders cracked $39,770 to reach the highest prices since the downtrend to lows of $29,300 began in mid-May.

Bitcoin price outlook

BTC/USD traded higher on the daily chart after the RSI snapped a long-term downtrend that marked the rejection at $42k back in early January. The upside that followed the latest momentum breakout elevated prices above the 50-day MA, with bulls now eyeing the highest daily close since mid-June.

Just before the recovery above the major resistance line at $35k, technical analyst Daniel Joe averred that the last time Bitcoin charts showed the above outlook, prices went on to hit a new peak.

A comparison chart from October 2020 shows the potential for BTC price to spike even higher above $40k given the historical breakout from a negative RSI and steady climb above the 50 DMA.

Chart showing BTC price breakout in October 2020. Source: Daniel Joe on Twitter

Technical analyst Crypto Ed has, however, cautioned that a breakdown to new lows is still possible. Pointing to the Elliott Wave chart pattern, he notes that failure to break above $42k could result in a bearish flip.

BTC price Elliott Wave chart: Source: Crypto Ed on Twitter

The analyst suggests BTC/USD will rally higher if it breaks above $42k. In this case, investors can target highs of $45,000 and then $49,200 as shown on the daily chart above.

As of writing, BTC/USD is trading around $38,280 after bulls shed some of the early morning gains. The cryptocurrency nonetheless remains in the green, nearly 12% up on the 24-hour chart and over 21% in the green over its open a week ago.

Looking at the daily chart, the RSI is attacking the overbought line while the MACD is increasing in the bullish zone. 

BTC/USD daily chart. Source: Tradingview

Elsewhere in the market, other cryptocurrencies have mirrored Bitcoin’s upside to post decent gains, with Ethereum (ETH) up 6.9% to trade around $2,363 as of writing. Binance Coin (BNB), Dogecoin (DOGE), and Bitcoin Cash (BCH) have also seen double-digit gains as they rally above vital support levels.