- 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