Technical Analysis and Market Entry: Bitcoin Eyeing Bullish Breakout

  • Bitcoin is back within the control of the market bears, following the failure to break and hold $9000.
  • A critical retest of a breached bullish flag structure is being eyed, where buyers could likely to be found.

BTC/USD: Recent Price Behaviour

The Bitcoin price lost its bullish momentum, after an initial promising run to the upside. BTC/USD had been running firmly to the north for five straight weeks, rallying from around $6400 up to highs around $9175. It was the most consecutive run that had been observed since May 2019. A decent wave of bullish pressure came into play as thanks to a breakout of a bullish flag structure, as seen via the weekly chart view.

BTC/USD ran into some supply at the highest levels seen since late October early November period. It somewhat makes sense to observe this cooling, given the sharp moves higher in such as short space of time. Naturally, some profit-taking coming into play, ahead of further potential committed moves to the north.

BTC/USD weekly chart.

Weekly Chart View

Price action via the weekly chart view, as early detailed was moving within a descending wedge structure. The pattern was more so viewable as a bullish flag, given the pole, which was formed as part of the early 2019 bull run. Bitcoin had run from lows of the $3000 territory, before peaking in June at the heights just shy of $14,000.

Furthermore, the price from there on went into cooling mode, forming the flag of the bullish structure. The first two weeks of January saw the breakout and extension above the flag. In terms of the easing south being observed via the latest weekly candle, it would suggest a potential retest. Should BTC/USD pull right back to mark a technical breakout and retest, it would see the price down at the $7500-400 area.

Daily Chart View

BTC/USD via the daily chart view the control is well with the market bears, given the failure to firmly break and hold above $9000. A demand zone can be observed below, running at the range of $8000 down to $7500. It is in proximity to the above-noted breached flag structure, in-fitting with the possible retest.

BTC/USD daily chart.

Trade Recommendation

Given the detailed cooling for BTC/USD, further moves to the south are still expected for now. Buy positions would be attractive again upon stabilization within the $8000-7500 region. A successful retest and hold of the flag would be desired confirmation, where entries are sought. Targets to the upside would be; $9000, $9500 and then $10,000. Stops to be placed below the flag trend line and demand zone at $7300.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Author:
Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.