During Monday’s Middle East conflict inspired drop in the Bitcoin price, critical support held strong, and on Tuesday a bounce is in the process of happening. Can this bounce take the $BTC price through the $64K horizontal resistance level, or will a lower high and more sideways price action be the potential outcome?
Bearish M pattern negated?
Source: TradingView
After hitting a new low below $58K at the beginning of the month, the $BTC price rose to a local high of around $64,700. Since then, it has gone sideways to where the price finds itself today.
Critically, the price is above $60K. In fact, the price is starting to hold above the $61,700 support level which is currently where the bull market trendline passes through.
On Monday, it was posited that the price could be playing out a bearish M pattern. However, when the price got down to the neckline of the bull market trendline and the horizontal support, it was from here that it bounced, thereby potentially negating the pattern.
As things stand, the $BTC price is attempting to get through the 200 SMA, which has become resistance. If it can do this, $63K is next, and then the top of what could be an amended falling wedge. The top of the original wedge is marked by the light dotted line.
Falling wedge breakout or continuance?
Source: TradingView
Is this a new wedge pattern that the $BTC price will traverse within? If it is, it could mean that the bull market trendline will be broken to the downside again. Another touch of the lower trendline would mean a new bottom price.
That said, these patterns generally break to the upside. It will be interesting to see if the price does indeed break below the bull market trendline in order to stay within the falling wedge, or whether it will break out soon before the pattern has even had time to mature.
The Stochastic RSI indicator lines in this time frame are perhaps now heading to the bottom. If they do, this falling wedge pattern may have a lot more life in it yet before it breaks.
Stochastic RSI cross-up a very bullish state of affairs
Source: TradingView
Looking at the $BTC price in the weekly time frame, the component that really draws the eye is the Stochastic RSI at the bottom of the chart. A cross-up, at the 20.00 level is a very bullish state of affairs.
If for any reason the price turns back down and the cross-up turns into a cross-down, then very bullish becomes very bearish. Falling out of the bottom of this potential current wedge pattern would then be a possibility, with a much lower price bottom on the cards.
However, all that said, the current setup is a bullish one. A breakout from this pattern could be exactly what is needed to suggest that $57,550 was indeed the low, and that the bull market has actually already begun.
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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