Bitcoin
Bitcoin is on the verge of a bullish breakout again. What to watch on the charts
At the time of my January article, bitcoin was trading near $45,000, and there were rumors circulating about the SEC finally approving an ETF. This became reality the next day. Let’s revisit the chart now. Our price target at that time was $66,500, close to previous highs. That value has since been reached, but in classic crypto fashion, BTC fell to $38,500 in late January before bottoming out. Despite the wild ride from a performance and volatility perspective, over the past six months, BTC has continued to do one thing very well – stick to the technical aspects. It never breached the escape zone as of October 23 and reached the target in early March. Now what? As we know, BTC has been flirting with $70,000 since it first reached it in March. While seeing it stall since then may have been frustrating for crypto aficionados, even BTC sometimes needs to catch its breath. And by doing this over the last three months, it has now formed FOUR different bullish patterns. Of course, that’s why it catches our attention now. Bullish Falling Wedge Pattern So far, only two of the four have been officially triggered. One of them is this falling wedge pattern. This may not sound optimistic, but it simply describes a pullback formation occurring within a larger trend. BTC has successfully broken out of this type of chart formation three times in the last 12 months. The measured move target from the recent breakout is near 79,000. A key component for BTC to actually achieve this goal will be to see momentum strengthening. This is measured by the blue 14-day RSI indicator. Each previous breakout of the falling wedge pattern has been accompanied by its RSI moving into overbought territory. This does not need to happen immediately, but it is a necessary component so that this upward movement can eventually take BTC to new highs and beyond. Two Bullish Patterns on One Chart The second and third bullish formations appear on this chart. We thought it was worth displaying them together, as one is inside the other. The green formation is a cup and handle pattern; the one in blue is a reverse Head and Shoulders pattern. The positive goals are $78,000 and $86,400, respectively. To reiterate, these goals are achieved by simply adding the height of each pattern to the breakpoints. Currently, only the smaller cup and handle pattern is active; the biggest one is not, but additional follow-up would soon trigger it as well. The Big One Finally, using all the price action from the beginning of 2021 until now, we get this huge potential inverse H&S pattern. As is evident, the last three months of consolidation have produced the would-be right shoulder. We would need a convincing breakout to new highs for this to become active. And that means we would need to see the revised smaller formations continue to function first. In other words, a lot needs to go right for this multi-year bull setup to happen, but it’s worth monitoring, especially since previous breakouts to new highs have ushered in even higher prices in BTC’s brief history. Let’s also remember that there isn’t even a month left until the last halving. Some of BTC’s best runs have occurred in the 12 months before and the 12 months AFTER the halving dates. Bitcoin is volatile and extremely young compared to traditional asset classes. However, from what we have seen in the last decade, their patterns tend to repeat themselves. Given its strong correlation with the S&P 500, all investors need to pay attention to what happens from here. -Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: (Owns GBTC) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO PURCHASE ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MAY NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here to see the full notice.