Bitcoin price hints at ‘megaphone’ bottom pattern, and a breakout toward $40K
Bitcoin price has been in a very tight range since bottoming out at $3,100 USD on April 16th, 2018. The price has been very stable, and has been a great example of a textbook ‘megaphone’ pattern, where buyers and sellers hold back from making a big move until the price has been close to the bottom. This has kept the Bitcoin price range from moving too far, and it has been a great way to predict the Bitcoin price bottom.
Bitcoin’s recent crash has had some investors in the cryptocurrency market celebrating—the price had bottomed out and was starting to stabilize, a clear sign that it had found a bottom. But before we get too excited, let’s take a peek at the price action over the past week. Bitcoin’s price action has been pretty calm, with the price bouncing back from the $6,500 to $7,200 range before starting to drop again. There was a slight bounce off the current $6,500 level, but it didn’t sustain.
The cryptocurrency market has been in the doldrums of late, with no signs of a recovery. For months now, the bitcoin price has been in a downward spiral, with the currency dipping below the $3k mark. The latest price low happened on Sunday, and bitcoin has continued to trade in the red.. Read more about bitcoin technical analysis and let us know what you think.
According to one traditional technical pattern, Bitcoin’s (BTC) recent recovery from below $30,000 has boosted its chances of continuing its retracement move upward.
When the price travels within two divergent trendlines, the megaphone-shaped pattern known as Broadening Formation emerges. According to Investopedia, a widening formation indicates investor debate about the next possible bias. As a consequence, higher interim peaks and lower interim lows are formed.
As seen in the chart below, Bitcoin seems to be trading inside a similar structure. Despite this, the cryptocurrency lacks volatility, which is one of the most important characteristics of the expanding formation pattern.
The Bitcoin market’s minimal price volatility is reflected by Bollinger bands that have been stabilized. TradingView.com is the source for this information.
If the pattern holds, the Bitcoin price will break out above the structure’s top trendline in a bullish breakout.
It is expected to increase by as much as the maximum height between the upper and lower trendlines of the expanding formation. Traders view the widening shape as a trend reversal pattern, resulting in the upward setup.
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However, until then, the pattern provides daytraders with swing trading chances, such as a rebound from the lower trendline presenting Long options toward the higher trendline, and a retreat from the upper trendline presenting Short opportunities toward the lower trendline.
Again, the price volatility of Bitcoin is minimal enough to rule out such intra-range setups.
Channel that is falling
In the Bitcoin chart below, the most immediate resistance level is around the dashed trendline.
The bullish widening formation’s upward potential is limited by the Bitcoin falling channel configuration. TradingView.com is the source for this information.
Bitcoin is expected to test $35,00 as its next resistance target if it closes above the dashed trendline. Based on the cryptocurrency’s previous price trends, a prolonged run upward has the potential to reach $40,000.
A retreat from the dashed trendline, on the other hand, tends to confirm a Falling Channel pattern. Bitcoin, on the other hand, may retrace its steps down towards the support trendline of the so-called Broadening Wedge (next downside target around $28,500).
Fundamentals of the Bitcoin price
The Bitcoin settings are contradictory, with bulls defending $30,000 as support and bears controlling the $34,000-$35,000 range. Unfortunately, this has confined the Bitcoin price within a trading range, leaving no intermediate indications as to where it intends to go next.
Fundamentals have been a major factor in keeping Bitcoin prices stable. On the plus side, the conventional financial sector’s inflationary pressures have aided Bitcoin’s safe-haven narrative. Meanwhile, the negative is growing regulatory dissatisfaction with the bitcoin industry across the world.
Security-based swaps regulations apply to cryptocurrencies, according to SEC Chairman.
China has banned cryptocurrency trading, India raided regional crypto exchange WazirX, and the United Kingdom has barred Binance’s affiliate from conducting regulated companies in the past two months. Binance has also received warnings and limitations from Japan and Hong Kong.
State regulators in the United States blocked crypto firm BlockFi’s accounts earlier this week, claiming that the business marketed unregistered securities. The industry has also been chastised for increasing carbon footprints via mining, which requires a lot of computing power to operate blockchains.
“I think it will be impossible to win public confidence, and for Bitcoin to climb the heights it achieved in early 2021, as long as worldwide regulation of cryptocurrencies is not relaxed, or a settlement is not found,” Adam Todd, Founder and CEO of Digitex, told Cointelegraph.
“National economics regulators, state environmental regulators, and towns concerned by “mining” increasing local electricity prices will wash cryptos away like a wave,” JG Collins, the head of the Stuyvesant Square Consultancy, said in a Seeking Alpha op-ed.
The author’s thoughts and opinions are entirely his or her own and do not necessarily represent those of Cointelegraph.com. Every investing and trading choice has risk, so do your homework before making a decision.
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