Bitcoin could be due for an even bigger climb as it breaks past the neckline of the complex inverse head and shoulders on the 4-hour time frame. Price is closing above the $3,900 mark and might go for an uptrend that’s the same size as the reversal formation.
The inverse head and shoulders spans $3,200 to around $4,400 so the resulting rally could be around $1,200 or up to $5,000 – the target that a cryptocurrency expert on Twitter claimed bitcoin would reach in ten days.
The 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, the uptrend is more likely to gain traction than to reverse. However, RSI is already indicating overbought conditions or that buyers are feeling exhausted. Turning lower could signal a return in selling pressure that might spur a drop to support levels.
Similarly stochastic has reached the overbought zone to indicate that buyers are tired and might let sellers take over. A brief dip could find support at the broken neckline around $3,900 or last until the dynamic support at the moving averages around $3,600.
Bitcoin has broken above a bullish flag continuation pattern and may be approaching the target on this formation, so profit-taking is to be expected. However, there is renewed bullish interest thanks to these strong gains, which might be enough to sustain the recent rallies.
More and more analysts are chiming in to say that bitcoin has finally bottomed out after a downbeat performance in the latter part of the previous year, so traders are jumping in for fear of getting left behind on the climb.
There is also a lot of anticipation building for the Fidelity institutional platform said to launch next month. This would usher in stronger volumes and more volatility that could keep retail traders and bigger market players interested in bitcoin and its peers.