Following a bloody weekend that saw more than $1 billion in long positions liquidated across the board, Bitcoin seems ready to bounce back.
- Bitcoin appears to be forming an inverse head-and-shoulders on its 30-min chart.
- If validated, BTC could surged to a high of $9,550 or higher.
- On the flip side, the $8,470 support level plays an important role in Bitcoin’s trend.
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Market participants are growing overwhelmingly bullish about the upcoming halving event which could allow Bitcoin to recover some of the losses incurred over the weekend.
Bitcoin Prepares to Break Out
With the halving just a few hours away, Bitcoin seems poised for high levels of volatility.
Indeed, the flagship cryptocurrency appears to be developing an inverse head-and-shoulders on its 30-min chart. This technical formation is considered to be one of the most reliable trend reversal patterns.
An increase in the buying pressure behind BTC that allows it to move above the neckline at $8,900 could signal a break out of the head-and-shoulders pattern. Such an upward impulse could send the pioneer cryptocurrency up 7.30% to around $9,550.
This target is determined by measuring the distance between the head and the neckline and adding it to the breakout point.
It is worth mentioning that moving past the overhead supply barrier may not be easy. Not only can the neckline contain BTC from a further advance, but also the 100 and 200-thirty-minutes moving average adds an extra layer of resistance.
If the bellwether cryptocurrency is able to move past this supply wall, then traders could expect the target presented by the head-and-shoulders to be reached.
Nevertheless, there is a probability that the overhead resistance is strong enough to prevent BTC from reaching its upside potential. Rejection from this level might trigger a spike in sell orders that sends Bitcoin back to the height of the right shoulder around $8,470.
If this were to happen, then the $8,470 support level will be key to Bitcoin’s trend. Closing below this barrier may see the flagship cryptocurrency pull back to the 78.6% or 127.2% Fibonacci retracement level.
These support barriers sit at $8,150 and $7,700, respectively.
Emotions are heating up in proximity to the halving, which seems to be building bullish momentum.
While a clear trade to the upside appears to be developing, the market makers could have taken control of Bitcoin’s price action. This could lead to erratic behavior over the next few hours.
Now more than ever, it is very important to implement a robust risk management strategy or stay out of the market to avoid adverse market conditions.
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