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Bitcoin Price Key Highlights
- Bitcoin could be in for a longer-term rally as an inverse head and shoulders pattern is forming.
- Price needs to break past the neckline around $7,800 to confirm that an uptrend is about to take place.
- Technical indicators are still reflecting the presence of bearish momentum, so it could be uphill from here.
Bitcoin price has formed a classic reversal pattern to signal that the downtrend might be over soon.
Technical Indicators Signals
The 100 SMA is still below the longer-term 200 SMA to show that the path of least resistance is to the downside. This suggests that the selloff is more likely to resume than to reverse.
The 100 SMA is also holding as dynamic resistance at the moment, so bitcoin price would need to surge past a couple of upside barriers before confirming a rally. The 200 SMA dynamic inflection point might also hold as a ceiling around $8,200. Also, the gap between the moving averages is widening to reflect strengthening bearish momentum.
RSI is on the move up but appears to be stalling as it closes in on the overbought zone. Turning back down could draw bears in and force bitcoin price to resume the slide. Stochastic has more room to climb so bitcoin price could follow suit and attempt a neckline break.
The chart pattern is approximately $900 tall so a breakout could lead to a rally of the same height, taking bitcoin price to $8,600 next.
Market Factors
There appear to be no clear catalysts for the latest bounce, with many simply attributing this to a pickup in overall risk appetite. This follows a resolution of the political crisis in Italy and confirmation that the meeting between Trump and Kim Jong-Un will push through next week.
At the same time, the dollar is taking some weight on Trump’s decision to slap higher tariffs on metal imports from its allies. Bitcoin could be poised to take advantage of risk rallies and dollar weakness from here.
