Bitcoin Price Raises Bull Flag in Preparation for Possible Move Higher
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- Bitcoin has formed a bull flag pattern on the hourly chart in the last 24 hours.
- A break above $8,890 would confirm a bull flag breakout and create room for a rally to $9,940 (target as per the measured move method). On the way higher, BTC may face resistance at the key Fibonacci level of $9,442.
- BTC confirmed a pennant breakout on Sunday. The hourly chart flag breakout, therefore, looks likely.
- A close below the 10-day moving average (MA), currently at $8,193 would abort the short-term bullish outlook, although that looks unlikely in the short term.
The ongoing bitcoin (BTC) price consolidation below $9,000 looks bullish in nature and could end up fueling further gains, according to technical charts.
The world’s top cryptocurrency by market cap is currently trading largely unchanged on the day at $8,720 on Bitstamp. Prices have been restricted to a narrow range of $8,940–$8,650 for more than 24 hours now.
The range-bound trading marks a weak follow-through to Sunday’s bullish close. The path of least resistance, however, remains to the upside with the price staying well above the former resistance-turned-support of $8,390.
Further, the price congestion has taken the shape of a technical pattern called a “bull flag” – a pause that often refreshes higher.
A break above the upper edge the flag, currently at $8,890, would confirm a flag breakout and accelerate the move toward $10,000.
Hourly chart
BTC has created a bull flag pattern following an upside break of a pennant pattern on Sunday.
A flag breakout, if confirmed, would create room for a rally to $9,940 (target as per the measured move method, i.e. pole height added to the breakout price).
The pennant breakout has already opened the doors to $10,000, as discussed yesterday.
On the way higher, BTC may encounter resistance at $9,942 – the 38.2 percent Fibonacci retracement of the sell-off from the December 2017 high to December 2018 low.
It is worth noting that the 50-, 100-, and 200-hour moving averages are trending north in favor of the bulls. The stacking order of the 50-hour MA, above the 100-hour MA, above the 200-hour MA is also a classic bull signal.
A flag breakout therefore, looks likely. The bullish MA studies also indicate that a flag breakdown (move below $8,620), if confirmed, could end up trapping sellers on the wrong side of the market.
Daily chart
The daily chart remains biased toward the bulls with the 5- and 10-day MAs trending north and the Chaikin money flow index printing positive – a sign of strong buying pressures.
Pullbacks, if any, will likely be reversed by the 5- and 10-day MAs, currently located at $8,454 and $8,193, respectively.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; charts by Trading View
via https://www.ohnocrypto.com/ Omkar Godbole, Khareem Sudlow