Back Above $8,500: Does Bitcoin's Rally Have Legs?

Bitcoin has bounced back above $8,500, but the rally is not backed by decent trading volumes, the technical charts indicate.

Subsequently, bitcoin gained more than $500 over the weekend, rising back above resistance at the 50-day moving average.

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 above Saturday's doji candle high of $8,468, signaling a bullish reversal.

As a result, the probability that bitcoin will rally to $9,000 this week is high.

Volume is an important indicator, as it shows the level of interest in bitcoin.

A rally backed by high volumes means greater reliance can be placed on the bullish move.

Conversely, a low volume rally trends to end up being a bull trap.

In BTC's case, currently, trading volume on Bitfinex continues to decline and more importantly remained low alongside positive price action, as seen in the chart above.

View BTC rally lacks substance, hence the outlook is likely neutral, despite the inverse head-and-shoulders breakout and the bullish doji reversal.

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.