Bitcoin's (BTC) has bounced back above $8,500, but the rally is not backed by decent trading volumes, the technical charts indicate.
The cryptocurrency closed below key technical levels on Thursday, signaling a bearish breakdown, but the ensuing sell-off unexpectedly ran out of steam at $7,925 on Friday. Then, over the weekend, bitcoin gained more than $500, rising back above resistance at the 50-day moving average.
As of writing, BTC is changing hands at $8,530, having clocked a six-day high of $8,644 earlier today.
While last week's bearish trend seems to have run out of steam (as seen in the charts below), the weekend's low-volume rally risks trapping the bulls on the wrong side of the market.
The inverse head-and-shoulders breakout indicates short-term bullish trend reversal - i.e. the pullback from the high of $9,990 has ended and the breakout has opened the doors to $9,000 (target as per the measured height method.
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BTC rally lacks substance (low volumes), hence the outlook is likely neutral, despite the inverse head-and-shoulders breakout (4-hour chart) and the bullish doji reversal (daily chart).
A failure to hold above $8,475 (inverse head-and-shoulders neckline) would revive the bearish view and allow a drop to Friday's low of $7,925.
On the higher side, only a high volume move above the 100-day moving average, currently seen at $8,857, would open the doors to $10,000.