Bitcoin nears $26,000 mark – chart patterns show clear upward movement
The cost of buying a bitcoin could cross the $26,000 mark, according to a textbook bullish indicator forming on the lower time frame chart. The pattern, known as a „bull pennant“, forms when an asset forms triangle-like structure after forming at Bitcoin Trader an upward flagpole. Traders see it as a signal that the trend will continue – that is, they believe the asset will continue in the direction of its previous trend after breaking the triangle structure.
Bitcoin is forming a similar bull pennant on its 1-hour (1H) chart, showing the following characteristics:
- Flagpole: Before the pennant structure was formed, the BTC/USD price rose. This led to the formation of a flagpole.
- Price fluctuation: After the formation of a flagpole top, BTC/USD began to consolidate sideways while leaving a trail of lower highs and higher lows behind it. This gave it the shape of a triangular structure – the actual pennant.
- Volume: Volume decreased as BTC/USD fluctuated within the pennant.
Traders are now waiting for a break above the pennant to confirm their extended bullish bias. Should such a move occur, the upside target would shift by as much as the height of the flagpole. In the current case, the height is almost $3,200, which means that the breakout move would push BTC/USD at least towards $26,294 – measured from the apex of the pennant.
Bull pennants have a 70 percent success rate, according to a study by Samurai Trading Academy. Therefore, there is still a 30 percent chance that the current bullish continuation pattern could end up being invalid.
If this were to happen, the BTC/USD exchange rate would risk correcting downwards – again by as much as the height of the flagpole.
This would take the pair to around $20,000, the previous resistance target that now serves as a support level.
Bitcoin’s weekly chart
The long-term time frame charts support the bearish corrective outlook. After posting a series of gains, the bitcoin market is now overheated.
Simply put, Bitcoin is trading at a higher price than its ideal bid. This typically leads to neutralising downward price movements.
Should this happen, the cryptocurrency risks a crash of at least 20-30 percent to bring its RSI back into the normal zone. This would automatically bring the BTC/USD price near/below $20,000.Categories: Bitcoin