The Bitcoin price is currently rallying strongly and after breaking out of a month-long channel, it has just touched $71,000, a good way above the major resistance level of $69,000. Is this just market manipulation, or could this be a legitimate rally?
Upside spike breaks through major resistance
Source: TradingView
Price action is moving fast early on Wednesday. $BTC shot out of the blocks after breaking out of a month-long descending channel and coming back to confirm the breakout. This time, instead of another fakeout, the $BTC price shot up in the space of a few hours, taking out the major $69K and also the $70K resistances in quick succession.
As can be seen in this very short hourly time frame, the price is following a new upsloping channel and has just touched its upper boundary. It could be rejected from here, perhaps to come back down and at least confirm the $70K level as new support, or, depending on the strength of this move, a breakout of this new channel could send the price a lot higher.
Short to medium term price targets
Source: TradingView
In the daily time frame it can be seen that this is a clear breakout. The first breakout candle was followed by a hammer candle that closed its body above the channel, and then today we have a strong green candle that came back to retest the top of the channel before also breaking through the major resistance and heading higher. The bulls will be looking to close this candle above $70,000 by the end of play on Wednesday.
If this takes place, what could be the next targets for the $BTC price?
A first minimum target is the measured move out of the channel. This could take the price to $73,000. A second target, if we take the channel as a legitimate bull flag, is out to $75,000.
Finally, if we keep it short term, the top of the falling wedge is at around $81K to $82K, while the next big resistance is at $84,600, which also closes an overhead CME gap at that level.
Stunning rally or possible bear flag formation?
Source: TradingView
The weekly chart has changed very quickly with this current breakout. As long as this rally maintains strength, the next major resistance at $85K to $86K is a good proposition. Do be aware though, given that $69K is such a major level, the price is likely to come back and test it as support. This will be key to a further continuation of this rally.
After positing that the current large price action pattern was a falling wedge, it now looks more promising as a huge descending channel. If this is the case, it’s very bullish as these patterns mostly break to the upside.
That said, horizontal resistance comes in at $85K, and it looks as though it could be bolstered by the 100-week SMA, which is leveling out around $87K.
One does need to take note of the Stochastic RSI indicators. The spike towards the 20.00 level has become very pronounced, even since yesterday. If the indicator lines are able to close above that 20.00 level at a weekly close, this would be the signal for the kind of upside momentum that could turn this into a stunning rally back to the highs.
Finally, a note of caution. There is the possibility that if the $BTC price does not maintain this strong rally, the current price action could paint another bear flag. Bear markets usually follow a tortuous path. This one may not be any different.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: Laurie Dunn
