Market Analysis

Bitcoin (BTC) Technical Analysis: Consolidating Inside Pennant Pattern, Possible Breakout Soon

from Crypto Vest 5 years ago 0 0 723

Bitcoin continues to consolidate inside a pennant today, tracking well between a strong uptrending support and decreasingly highs. In the last few hours, the asset has started to oscillate closely around the $6,500 level, with a noticeable drop in volatility between the bulls and bears. This could be regarded as a sign that either traders are uncertain of where the market is about to go and are waiting for a stronger confirmation, or they are gathering for a breakout.

Could buyers be about to pull something off here and deliver the breakout everybody has been waiting for? Or will the #1 cryptocurrency continue its gradual tumble further down the chart as bears continue to overpower the market? Let’s take a look.

So far, the $6,500 level has held strong through this week’s trading, helping to sustain the bulls’ current momentum as we approach the long-standing resistance that has held BTC down for the whole of this year.

Despite an increase in BTC/USD short trades today, momentum over 1- and 2hr candles appear to be siding with bullish traders; with positive signals on both the MACD and RSI indicators that suggest bears are weakening. Having already tested the lower pennant support today, we would like to see buyers push on to the downtrending resistance above somewhere at the $6,600 mark, to remain within the current pattern.

On the 1D BTC/USD chart, we can see that the Bollinger Bands are constricting tighter as the asset continues to collect between the $6,400 - $6,800 region. Usually, we expect high volatility after periods of constriction, which would coincide with a breakout after BTC reaches maximum consolidation - potentially in the next few days.

The Ichimoku indicator is still showing a resisting Kumo stretching out above the current price action, but the Kijun-Sen line has passed below the Tenkan-Sen, which is a promising sign that bearish momentum is dropping. We would like to see candles climb through the cloud to confirm a strong reversal trend, but the $6,800 resistance will need to be overcome if BTC is to continue bullish.