The Bitcoin bulls have finally done it. A breakthrough of the 7-month downtrend, and a hold above the strong $74K resistance is an excellent beginning to what could become a full-scale trend change. Can the bulls now push the price above $80K and nullify a bear flag that is 11 weeks into its development?
$77,000 next?
Source: TradingView
A quick glance at the 4-hour time frame for $BTC reveals that there isn’t much to stop the price rising to the top of the bear flag, taking the price to around $77,000. Once there, buyer exhaustion might be setting in, although there is the chance that a short squeeze could have the domino effect of short-covering that could push the price a lot higher than this.
It will be very important for the bulls to hold $74,000 as support, which can be the base for a coming assault on the top of the bear flag, although there could still be a retest and confirmation of the downtrend line first.
Big targets
Source: TradingView
In the daily time frame the $BTC price action is looking a lot more promising for the bulls in this second bear flag. Yes, there is always the chance of another rejection from the top of the flag, but the fact that the price has now broken through such an important downtrend should provide some decent momentum.
If the price can break out of this bear flag, an exceptionally bullish thing in itself, $80,000 marks the initial bottom of the first bear flag. This would be the next target. Ultimately, the big resistance level at $90,000 could open the door to $100,000, and finally the all-time high at $126,000.
The bottom of the chart illustrates how two ascending channels in the RSI mirror the two bear flags above. It can be seen that there is still plenty of room for the indicator line to rise before it hits the top of the current channel. This could take place as the price action hits $80,000, or possibly as high as $90,000 if a strong rally occurs.
A large bottoming pattern forming?
Source: TradingView
The weekly chart shows the clear breakout candle on the other side of the descending trendline. Can this now turn into a strong upside rally? The RSI at the bottom of the chart reveals that this is a strong possibility. The previous two times that the $BTC price broke out of big chart patterns there were huge rallies to the upside. Green arrows show how the breakouts of the descending trendlines in the RSI were matched exactly by breakouts in the price action. This is the weekly time frame, therefore fakeouts do not often occur.
One more thing. The current price action does have the appearance of a bear flag. That said, if it is a bottoming process, it could be that a large bullish W pattern is forming, just like it did for the breakout of the last big falling wedge pattern.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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