Bitfarms Forms Bullish Pattern As Bitcoin Consolidates Near 50K

Bitfarms Ltd BITF sold off over 16% on Aug. 17 after printing its second-quarter earnings the day prior. This Bitcoin BTC/USD and alt-coin miner’s stock has been volatile because it is often affected by the wild fluctuations in the cryptocurrency market.

The Toronto-based company did show strong growth when it printed its results. Bitfarms’ revenue increased 398% over the previous quarter from $29.3 million to $36.7 million. It mined 758 Bitcoins during the quarter at an average cost of $9,000 per piece.

On Monday, Bitcoin broke up from a daily bull flag Benzinga called out on Sunday before entering into a period of consolidation near the 50K level. If Bitcoin continues its ascent in the coming days, Bitfarms' stock could follow and break from its own bullish pattern.

See Also: How to Buy Bitcoin With an IRA 

The Bitfarms Chart: On Aug. 11, Bitfarms’ stock hit a high of $7.47 and then entered into a period of consolidation. The run-up to the high, paired with the consolidation, has caused the stock to form a bull flag pattern with the pole created between Aug. 3 and Aug. 11 and the flag between Aug. 11 and Monday.

On Monday morning, Bitfarms stock attempted to break up bullishly from the flag but failed at the upper descending trendline and wicked from it. The rejection caused sellers to come into the stock and Bitfarms fell almost 3% lower intraday but was holding support at the eight-day exponential moving average (EMA).

When Bitfarms hit its new high on Aug. 11 its relative strength index measured in at almost 80%, which is oversold territory and a sell signal for technical traders. When BitFarms hit the level back on Feb. 19 the stock sold off almost 50% over the following 10 trading days.

Bitfarms is trading slightly above the eight-day and about 5% above 21-day EMA with the eight-day trending above the 21-day, both which are bullish indicators. Bitfarms is trading well above the 200-day simple moving average which indicates overall sentiment in the stock is bullish.

• Bulls want to see big bullish volume come in and drive Bitfarms’ stock up through the upper descending trendline of the flag formation and over an upper resistance level at the $6.74 mark. If it can regain the level as support it has room to head toward $7.47.
• Bears want to see sustained bearish volume continue to drive the stock lower until it loses support at $5.49. If it can’t hold the level as support it could fall toward the bottom of the flag pattern and toward the $4.59 area.