In classical technical analysis, an ascending triangle forms either as a continuation pattern midway through an uptrend or as a reversal pattern at the end of a downtrend. A break out of the triangle (i.e. a candlestick close above the upper channel) signifies a pattern completion, and infers a target of at least the height of the triangle in question.
A quick look at the 15 minute price chart on the bitstamp feed reveals just such a pattern, and – therefore – offers up a bullish bias for the latter half of this week. We are currently trading just shy of 237, and approaching the apex of the triangle. The level to watch now is 237.25 to 237.50.
If we can get a close above this midway through the European morning session, it would validate the pattern. The inferred target (in classical sense of the word) lies at 243 flat. However, such a bullish break may rise above there. As the chart shows, 243 is just shy of long-term resistance at 245.95, and – further – weekly highs at 248.75.
Therefore, if we do close above 243.00, there is no reason to think we cannot break resistance and – further – these highs. Bitcoin price declined heading into the latter half of last week, as a range of fundamental influences weighed heavily on market bias. Mycoin one of the major culprits, markets sold off as a response to the panic injected into the market. Now however sentiment looks to have steadied, and emotions no longer seem to be in control. This is when classical patterns really come into their own, and is why we expect to see some gains this week.
Those looking to trade bitcoin price to the upside could put a stop below the triangles lower channel (around 236) as a break below this level would invalidate the pattern.
Charts from Bitstamp