Towards the end of last week, we published an article that outlined the intraday action in the bitcoin price, and suggested that we may see some bullish momentum as we headed into the weekend. Action throughout Saturday and Sunday has validated this suggestion, and the bullish run early Monday morning (GMT) has culminated in a classical technical charting pattern that – once again – hints at further upside. This said, what are the levels to watch as we head into the European open? Let’s take a look.
The aforementioned bullish run topped out just shy of 280 flat, before correcting about three dollars to find a medium-term floor at 277.46. Since this correction, we have repeatedly returned to the 280 flat mark, followed by a short-term correction. However, each time we have corrected, the bitcoin price has declined by a smaller and smaller amount. This has presented us with an ascending triangle pattern – traditionally a pattern that precedes a continuation of an uptrend in other asset markets.
So, what should we be looking for? Well, the pattern validates on an upside break – that is a close above the upper channel resistance – in this instance, 279.50. If we do get this break, the pattern rules puts an initial upside target at a height equal to the back end of the triangle, an approximate $3.5 gain, to a medium-term target of 283.5.
One thing to bear in mind is that – if we do see a break – we may initially see a short-term correction back down towards 279.50. The more conservative trader can wait for this correction and enter on a bounce from resistance turned support. In order to ensure a timely exit in the event of a bias reversal – and a pattern invalidation – a stop loss below the triangle’s lower channel (around 278.50) serves as an effective risk management parameter.
Charts courtesy of Trading View