Key Indicator Turns Bullish as Bitcoin Struggles to Break Above $10K

The cryptocurrency may challenge 2019 high above $13,800 before the year's end.

A pennant breakout on the hourly chart could yield a re-test of recent highs above $10,000, although that looks unlikely.

A widely-tracked bitcoin price indicator has turned bullish for the first time in over three months, hinting that a move to yearly highs lies ahead. The moving average convergence divergence histogram - an indicator used to identify trend reversals and trend strength - has crossed above zero on the three-day chart, confirming a bearish-to-bullish trend change.

The MACD crossed above zero in late December 2018, confirming a bottom had been made near $3,100 and remained in the bullish territory throughout the first quarter, even though bitcoin's recovery rally remained capped above $4,000.

The cryptocurrency broke into a bull market on April 2 with a convincing move above a bearish lower high of $4,236 created on Dec. 24.

So if history is a guide, the MACD's latest bullish turn could see bitcoin breaking out of a four-month falling channel and challenging yearly highs above $13,800 before the year's end.

So far the MACD's move above zero has failed to be reflected in price gains.

Notably, bitcoin failed to close above the 100-day MA for the third straight day on Tuesday, having faced rejection above $10,000 over the weekend.

The repeated failure to hold onto gains above the 100-day MA indicates buyer exhaustion.

On the other hand, a high-volume pennant breakout, if confirmed, would imply a resumption of the rally from Friday's low near $7,400 and will likely yield a quick break above $10,000.