Bitcoin’s (BTC) jump to a 15-day high is encouraging, but caution ahead of the US Securities Exchange Commission’s (SEC) imminent decision on a bitcoin exchange-traded fund (ETF) could limit further price gains.

The leading cryptocurrency rose to $6,899 on Bitfinex earlier today – the highest level since Aug. 7 – and is accompanied by a 10 percent drop in the BTC/USD shorts, adding credence to our assessment that BTC has been mimicking the price action observed in the run-up to a major rally that occurred on April 12.

More importantly, BTC’s convincing move above $6,600 marks an upside break of the narrowing price range and signals continuation of the rally from the Aug. 14 low of $5,859.

So, it seems safe to say the doors have been opened for the psychological hurdle of $7,000. However, that may be an uphill task in the short term, as investors are likely to adopt a cautious stance ahead of the SEC’s ruling on whether to allow the ETF – due in the next 36 hours.

Further, BTC picked up a bid exactly at 1:00 UTC – the moment when Bitmex, the world’s largest exchange for synthetic shorts, shut down for maintenance, forcing many to question the legitimacy of the price rally. As a result, investors may remain on the fence until a more credible evidence of the bullish breakout emerges.

At press time, BTC is changing hands at $6,670 on Bitfinex – up 3.6 percent on a 24-hour basis. While prices could skyrocket if the SEC approves ProShares bitcoin ETF, the bitcoin market will likely crater if the SEC rejects the ETF or delays the decision.

4-hour chart

The upside break of the diamond pattern seen in the chart above confirms a bearish-to-bullish trend change, that is, the sell-off from the July high of $8,507 has ended and the bulls have regained control.

The relative strength index (RSI) is holding above 50.00 in favor of the bulls. Meanwhile, the 50-candle moving average (MA) is beginning to rise in a bull-friendly manner and could soon cut the 100-candle MA from below (bull cross).

Daily chart

BTC’s rise to $6,899 validates the bullish crossover between the 5-day and 10-day moving averages (MAs) and the upward sloping RSI.

Although it appears the charts are aligned in favor of the bulls, BTC has already retraced close to 50 percent of the gains seen today, possibly validating the skepticism around today’s rally.

What’s more, the retreat to $6,670 also marks a failure to hold on to gains above the key resistance at $6,870 (38.2 percent Fibonacci retracement of the sell-off from $8,507 to $5,859).

View

BTC’s bullish breakout has proved to be lacking in staying power. That said, acceptance above $6,870 (Fibonacci hurdle) could boost the odds of a rally to $7,000.

On the downside, a move below $6,230 (Aug. 20 low) would shift risk in favor of a drop below $6,000 (February low).

The SEC’s decision on the bitcoin ETF could send prices either way, but until then the market will likely trade on a cautious note.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; Charts by Trading View