Bitcoin bounced back on Tuesday after the Federal Reserve announced its plans to purchase corporate bonds to boost the financial markets through the pandemic.
The benchmark cryptocurrency surged by up to 7.82 percent from its Monday low below $9,000. The move uphill took its price above $9,500, sparking calls towards an extended recovery run towards the $10,000-$10,500 area.
One pseudonymous analyst said earlier Tuesday that Bitcoin’s recovery from below $9,000 is a part of a “re-accumulation” strategy. He concluded that the cryptocurrency would break above $10,500, a resistance level from June 1, 2020, and February 13, 2020, as the uptrend flourishes.
The analyst explained that bitcoin is testing 10,500 for the third time since February 2020. Nevertheless, each downside break leads to an accumulation phase that causes Bitcoin to retest the red area, as shown in the chart above.
The analogy met criticism by other top analysts. One among them argued that each rejection from the $10,000-$10,500 grew stronger, adding that the downside corrections – more or less – pointed towards the absence of buyers.
Nevertheless, those in favor of a bullish breakout argued back by saying that macroeconomic catalysts played an essential role in exacerbating Bitcoin’s sell-offs near the red zone. They were visibly pointing to the stock market crash in February and March 2020 that led almost every asset lower.
Bitcoin’s latest attempt to breach above $10,500 came at a time when the U.S. stock market was correcting lower from its overbought levels. The cryptocurrency, which formed an erratic positive correlation with the S&P 500 index, merely tailed the downside.
On late Monday, both Bitcoin and the S&P 500 recovered in tandem after the Fed revealed it would begin buying individual corporate bonds. Futures tied to the U.S. benchmark hinted a rally continuation after the New York opening bell Tuesday. It left Bitcoin with a similar upside bias.
The BTC/USD exchange rate is now trending inside an Ascending Triangle (red area). The pattern typically leads to an upside breakout worth the maximum height of the Triangle. That roughly puts the cryptocurrency’s upside target near $11,800.
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