History Shows That Bitcoin’s Consolidation Phase is Likely to Result in Fireworks
Bitcoin has been caught within a tight trading range between $9,000 and $10,000 for two months now. This trading range is still showing few signs of degrading as buyers continue guarding against a dip below its lower boundary.
That being said, history does show that multi-month bouts of consolidation – like the one BTC is caught within currently – do tend to end with explosive movements.
Historical data also shows that they can persist a lot longer than two months, signaling that it may be quite some time before the crypto can post any trend-defining movement.
As for which direction these potentially imminent “fireworks” could lead BTC – one trader is noting that it could soon rally towards $27,000.
He claims that this rally would be fueled by a massive multi-year bull pennant breaking and would lead the crypto into its next epoch.
Bitcoin Consolidation Phase Could Last Longer, But Likely to End in “Fireworks”
Since the start of May, Bitcoin has been caught within a tight trading range between $9,000 and $10,000.
There have been a few occasions in which the crypto has ventured out of the boundaries of this range, but they have all been fleeting.
As seen on the below chart, the two levels beyond this range that traders have targeted sit at roughly $8,500 and $10,500.
Chart via TradingView.
It does appear that the crypto’s trend will remain somewhat unknown until one of these high time frame levels is broken.
While zooming out and looking towards Bitcoin’s historical price action, multi-month periods of sideways trading are not unprecedented.
One analyst recently offered a chart showing that they have been seen on multiple occasions throughout the past decade, noting that massive movements typically follow them.
He even adds that the current volatility – despite being low – is not as low as it has been seen in the past.
“BTC volatility is low, but not at record lows in terms of BB width. Red indicates historic daily BB squeeze levels similar or tighter to current volatility squeeze. This can last quite a bit longer, but once price broke the squeeze it often resulted in an aggressive move,” he explained.
Image Courtesy of BTC Jack Sparrow. Chart via TradingView.
Where Will the Next Movement Send Bitcoin
The potentially imminent “aggressive move” that Bitcoin is likely to see could heavily favor buyers.
One analyst noted that a massive bull pennant formed over the past three years could result in a movement to $27,000.
“Bitcoin monthly chart – Once we break this bull pennant, my target is roughly $27,000,” he explained.
Image courtesy of Big Cheds. Chart via TradingView.
While looking towards the above chart, it appears that this pennant will resolve by 2021, meaning that investors could have insight into its validity in the coming five months.
Featured image from Shutterstock. Charts from TradingView.
OhNoCrypto
via https://www.ohnocrypto.com
Cole Petersen, Khareem Sudlow
