Shortly before the European markets closed on Monday afternoon, we published this piece, highlighting the day’s bullish action and hinting that there could be further bullish action to come, providing the upside momentum held firm. Throughout the US afternoon session, and into late Monday evening GMT, we saw this bullish action materialise, with the bitcoin price trading to fresh monthly highs just ahead of the revered 300 level. From these highs, we have seen a small correction, but a look at the chart offers up no reason why we can’t see further gains during Tuesday’s European session. This said, what are the levels we should be looking at? Have a look at the chart.
As the chart shows, having corrected from aforementioned highs around 295 flat, the bitcoin price has formed a triangle. In an uptrend like this, a triangle with a downward sloping upper channel and a flat base is often considered a continuation pattern in the more traditional asset markets. Adapting this pattern to the BTCUSD, we will be looking for a break of the upper channel to validate the pattern’s bullish bias and signal upside potential in the bitcoin price.
A break above 292 would give us the signal, and validate an initial upside target of 294 (last night’s highs). Bear in mind that we may see a small correction before we reach this level, and this correction could offer the more conservative traders an opportunity to enter on a confirmed retest of resistance turned support.
We’ve seen quite a lot of volatility over the past few days, and so its important to set strict risk management parameters to avoid being chopped out on the wrong side of a reversal. A stop loss below the triangle’s lower base (somewhere just shy of 288 flat) would get you out of the trade for a small loss in such a scenario.
Charts courtesy of Trading View