After making its new all-time high on Monday the Bitcoin price has continued to retrace back to lower levels, albeit slowly. Already having dipped just below $120,000, could this have been the bottom? The next horizontal support is at $118,000, but will the price get there?
Break of trend is awaited
Source: TradingView
After making that all-time high at the beginning of the week, the $BTC price has kept the market salivating at the thought of a return to it, and a surge up to the next price level. In that vein of thought, this current retracement does look like a pause before the bulls are let loose again.
In the 4-hour chart above, it can be seen that the price has been following a downward trend, with a decent-length candle wick to the downside that almost tagged the 0.382 Fibonacci level. It may be that this was indeed the local bottom.
The first signs that this trend is about to change would be a break of the descending trendline in the price action with a confirmation above. This would likely be validated by the indicator lines in the Stochastic RSI crossing back up, and the indicator line in the RSI crossing up above its own downtrend line.
Pros and cons of current inverse head and shoulders pattern
Source: TradingView
In the daily time frame it’s still all about the formation of an inverse head and shoulders pattern. The right shoulder looks relatively small, but this does not invalidate the pattern. In fact, this could just suggest that buyers are not allowing the price to fall further before they step in – a very bullish scenario. What will be important is to see a decisive close above the neckline with increased volume to validate the pattern.
Just one point of concern to take note of is that generally the left and right shoulders should take a roughly similar amount of time to form. As it stands, if the $BTC price goes up to the neckline from here, this would mean that the right shoulder would have completely formed in the space of a week or so, while the left shoulder took over 4 weeks. This potentially much shorter formation period could suggest that there hasn’t been sufficient consolidation, possibly leading to a weaker breakout or an invalidation of the pattern.
It’s now or never for Bitcoin
Source: TradingView
The above weekly chart for the $BTC price illustrates the whole of the bull market. It can be seen that higher highs and higher lows have continued throughout. The green arc shows the smooth parabolic movement of the price as the increase becomes steeper.
Four touches of the 8-year ascending trendline have now been made in quick succession. This compares with the first touch at the top of the 2017 bull market, and one more touch during the 2021 bull market. The curve is rising into the trendline, and the space for the price action is narrowing. Yes, there could conceivably be a further slide in the price from here, but with the $BTC price resetting after becoming overbought, an oversold condition is now approaching.
It’s now or never. There are only two ways for the price to go. To fall down through the parabolic curve and enter a bear market, or to break up beyond the ascending trendline and go into a potentially huge blow-off top, and final stage of the bull market. Which will it be?
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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