Earlier today we published a piece that outlined the ascending triangle within which the bitcoin price was trading. We noted that – if we could get a close above the triangle’s upper channel – it would validate the pattern and suggest a bullish reversal, adhering to classical technical charting rules. Around midday we did get this break, and instantly got a run towards our target. However, we met resistance around the 240 level, and corrected back down towards the upper channel. We have now bounced once again from this level, suggesting we are experiencing a textbook break and retest.
So, with this in mind, what can we expect as we head into the US afternoon session? Well, if the pattern holds, we should see a run towards our initial target of 243. However, bear in mind that – with the triangle upper channel holding as support – its lowest channel may now serves as interim resistance. With this in mind, we may get a temporary correction back down to the longer-term upward sloping trend line channel – with 238 likely providing a floor of support.
If the bitcoin price does bounce down towards this level, don’t expect price to travel much farther. Instead, look to the upside towards our initial target. One thing to bear in mind is that – especially with an asset like bitcoin – fundamental effects can quickly invalidate technical patterns. For this reason, it’s important that a trader always maintains strict risk management principles – by using a stop loss, for example.
We saw price gain today, and earlier we suggested that a break below 236 would invalidate any bullish bias. Now we can raise this level to just below the uptrend sloping channel at 237.5. A stop loss below this level would minimize exposure in the event of a fundamentally driven downturn in the bitcoin price.
Charts courtesy of TradingView