Technical Analysis and Market Entry: BTC/USD Bulls Readying For Another Big Breakout

Bitcoin bull

 

  • Bitcoin bulls remain in control as the price takes a period to consolidate, ahead of further moves north.
  • BTC/USD price action has formed a bullish pennant structure, subject to a breakout.

BTC/USD: Recent Price Behaviour

The Bitcoin price is enjoying a substantial period of upside momentum, which has very much been the case since the start of January. BTC/USD started to receive decent buying interest sub-$7000, which was the bottom area at the back-end of 2019. It has been rallying for two consecutive weeks, having gained some 22%.

Last week made a critical breakout above an upper part of a range, that had been containing Bitcoin for six weeks. The low of the range was down at $6900, to a high of $7600. Given the duration of BTC being capped within this, the breakout was somewhat explosive. The breach saw an aggressive wave of buying pressure through the $7600 barrier.

BTC/USD weekly chart

Weekly Bull Flag

BTC/USD was moving within a bull flag structure from the latter stages of June, after peaking up at $14,000. The change in trend was confirmed following the weekly close, seen from the candle closure of 24 June week. A bearish shooting star formed, which lead on to deeper downside pressure. The sellers were in control right up to late 2019, before stabilizing. It did lead to the construction of the noted flag pattern.

The current weekly candle has made a solid push through the upper acting trend line of the flag. Should the price hold above the flag, then this will likely be the start of a stronger uptrend for Bitcoin. There is plenty of room to the north for bulls to further capitalize and drive BTC/USD to new heights.

4-hour Chart View

Price action via the 4-hour chart view recently formed a bullish pennant structure, between 14-16 January. A breakout from this was observed, which invited the most recent bout of upside momentum. The price had pushed back up to its highest levels seen since 10 November, when the market was at the time in a downtrend.

Another formation of pennant can be seen, which has contained BTC/USD since 17 January. Price action is largely narrowing, subject to another breakout, likely again to be capitalized by the bulls.

BTC/USD 4-hour chart.

Trade Recommendation

Given the above-detailed structure, buy positions remain very attractive. An entry around the current market price, targets up at; $9500, $10,000, and then $11,500. Stops to be placed below the pennant at $8700.

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.