Bitcoin is still looking upwards, having achieved fresh record highs overnight.

As per CoinDesk’s Bitcoin Price Index (BPI), the world’s largest cryptocurrency by market capitalization rose to an all-time high of $7,990 at 01:18 UTC. According to CoinMarketCap, the cryptocurrency has gained 4 percent in the last 24 hours. Week-on-week, the BTC value has gone up by 12 percent.

All in all, the cryptocurrency has staged a remarkable “V-shaped” recovery from the last week’s lows near $5,500. But, traders may be wondering if gains can continue.

As noted yesterday, the investor community appears to be warming up to the idea of moving money out of equities and bonds and into bitcoin – sentiment arising from CME Group’s upcoming bitcoin futures listing. Industry startups appear to be positioning as well, with Coinbase announcing yesterday a product launch for institutional clients.

Price action analysis appears to suggest the market is taking the news well. A potential rise well beyond the $8,000 mark is on the cards, although there is merit in being cautiously bullish.

Bitcoin chart

The above chart shows:

The rally to record highs is backed by a rise in trading volumes. A high volume rally is a sign that the trend has legs

However, the money flow index (MFI), which uses both price and volume to measure buying/selling pressure, doesn’t reflect the “V” shaped recovery and remains flat. A bearish price-MFI divergence would be confirmed if bitcoin closes today on a weak note.

The relative strength index (RSI) is well short of the overbought territory, thus there is scope for a further rally in bitcoin. However, again, a bearish divergence would be confirmed if bitcoin ends today with losses.

4-hour chart

There are no signs of stress on the above chart, except for the overbought nature of the MFI and RSI.

View

Bitcoin looks set to rise above $8,000 and test $$8,187 (161.8 percent Fibonacci extension level of the move from the Jul. low – Aug. high – Sep. low).

Only a break below $6,457 (61.8 percent Fibonacci retracement level) would signal a short-term bearish trend reversal.

Bearish Scenario: A pullback to $7,200-$7,000 cannot be ruled out if prices fail again to rise above the $8,000 mark. Watch out for bearish RSI and bearish MFI divergence.

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