Today’s Chart: Bitcoin Eyes Breakout
- Bitcoin benefits like the US dollar and vice versa
- Recession fears weigh on interest rate expectations
- BTC may be on its way to $25,000
Has for the first time in weeks made a decisive bullish move, raising hopes that it may have bottomed out after a turbulent first half of the year.
Bitcoin’s sharp reversal since mid-week has coincided with a drop in US bond yields and , and a rally in the US and . In other words, it has been a period of risk for the financial markets as a whole, and not necessarily a crypto-specific rally.
The bad US print has the Fed slowing the pace of hikes and potentially going into reverse in early 2023. After all, that’s what the Fed chairman had hinted at the day before.
Powell indicated at the FOMC press conference on Wednesday that the pace of rate hikes will slow, and that future increases will depend on incoming data. He said:
“While another unusually large increase may be appropriate at our next meeting, that is a decision that will depend on the data.”
Well, GDP was pretty bad, so I highly doubt it will be a 75 basis point hat trick.
Regardless, what’s important is that this week’s moves have left Bitcoin in good technical shape as we approach the end of the week – and the month:
Following the completion of a three-bar reversal pattern on Wednesday, Bitcoin showed follow-through in buying momentum as it broke above a short-term bearish trend line on Thursday, before stalling ahead of its intra-month high of $24,260.
A three-bar bullish reversal pattern looks something like this:
Source: TradingCandles.com
A three-bar bullish reversal pattern can be found on any time frame, but the higher the time frame, the better the signal tends to be. As the name suggests, it consists of three bars, the first of which is a large bearish candle. The second candle is usually a small hammer-like candle, although it can be any shape. The third candle is usually a large bullish-looking candle that ends up above the opening price of the first candle. If it closes above the high of the first candle, even better.
Essentially, a three-bar reversal pattern shows a shift from previous selling to strong buying.
The fact that this happened above the now rising 21-day exponential moving average made it all the more bullish, even more so as the bearish trendline also broke down.
From here, it looks like Bitcoin is going to at least probe liquidity above the $24,260 level mentioned earlier. Above this level, there are no previous benchmarks until $26,500 – the May low. Obviously, it pays to keep an eye on the next round level of $25,000 that comes between these two levels.
Without getting ahead of ourselves, there is even the possibility that we could see the next psychological level of $30,000 in the not-too-distant future, where Bitcoin previously spent several weeks before breaking down. By the way, around $30,000 is also where the long-term bearish trend line comes into play. Thus, we can at least see BTC break there.
Let’s take it one step at a time and reassess the situation if and when we get there. For now, we have solid, bullish-like price action to work with, and the focus should be the next level of potential resistance at $26,500.
Disclaimer: The author currently owns none of the securities mentioned in this article.
