- Bitcoin is pushing the impact of the head-and-shoulders pattern with $8,200 as the critical target.
- The rising wedge pattern is dangerous for the accrued gains; its effects could test $6,400.
Bitcoin’s recently formed head-and-shoulders pattern is still the center stage of the current price action. The ongoing recovery emanates from lows close to $7,400 to highs testing $7,600. A head-and-shoulders pattern is a pattern that is used in classic technical analysis to predict a reversal from the previous extended trend. In this case, Bitcoin’s recovery from the dive from levels above $8,000 to the previous support marginally above $6,500.
Although the momentum from the support at $6,750 fizzled out at $7,700, Bitcoin has remained relatively bullish. The 50 Exponential Moving Average (EMA) on the 1-hour chart has also been instrumental in stopping losses towards $7,400. Moreover, the 100 EMA gave an assurance that enough support was available, and buyers only needed to worry about the recovery.
BTC/USD 1-hour chart
An accelerated trendline emanating from the support at $6,750 is proving to be quite helpful in averting lower corrections and encouraging the buyers to keep moving. The significant trendline support, forming part of a larger rising wedge pattern will come in handy later, a reversal occurs towards $7,000.
Bitcoin must continue to take advantage of the momentum offered by the head-and-shoulders pattern to extend the bullish action above $8,000 and even form support past $8,200. On the flip side, a reversal below the rising wedge pattern could see Bitcoin drop fast below $7,000 and even taste $6,400 support.
Meanwhile, the short-term trend will remain bullish as long as the RSI sustains the upward movement. High volume and increasing levels of volatility are the ingredients Bitcoin needs to forge the much-awaited move above $8,200.
Bitcoin Key Technical Levels
Spot rate: $7,530
Relative change: +90.50
Trend: Generally bullish
RSI: bullish above the average, which shows a stronger bullish grip.
Support: $7,400, $7,000, $6,750 and $6,500
Resistance: $7,600, $8,000 and $8,200
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John is a talented writer with over two years of experience actively contributing to the cryptocurrency industry by providing credible, interesting and easy to read the content. His main focus is on cryptocurrency price analysis and industry news coverage. Lets follow him on Twitter at @jjisige