For those still waiting for a better entry point on bitcoin, well you are probably going to have to keep waiting.
Bitcoin spent much of the last several weeks consolidating between $19.5k and $16.3k, which actually presented about a 25% pullback for those nimble traders.
However, based on the price action we are seeing now, I think the next move is higher, and probably significantly higher.
That consolidation range had been putting in a symmetrical triangle pattern on the daily chart, which can be seen below:
(Source: https://www.tradingview.com/chart/?symbol=BITSTAMP%3ABTCUSD)
A symmetrical triangle pattern can be a reversal pattern or a continuation pattern, depending...
In the vast majority of instances, when the price breaks out of the triangle, it tends to trend in that direction.
In the above example, we can see that the price is breaking out of the triangle to the upside, which means the odds favor bitcoin continuing to move in that direction over the coming weeks.
Predicting an ultimate price target can be rather difficult, but in patterns like this sometimes we can use measured moves to determine where the price may head.
One school of thought on measured moves says to take the top of the triangle pattern and subtract the bottom of it to get the measured move target.
In the above example, that would mean subtracting about $16.3k from about $19.5k, which would give us a range of about $3.2k.
You then add this number to the breakout from the triangle, which is happening now at about $19.2k.
So, adding $3.2k to $19.2k would get us around $22.4k for a potential near term target.
Others like to zoom out a bit and use the run-up into the triangle pattern as a possible price target coming out of it.
In this instance, the rally really started around $11k and ran to a little over $19k, which would give us a range of about $8k.
Adding that to the current breakout would point to a near/medium term target of around $27k ($19k + $8k).
Personally, I think we break $20k in the coming weeks by a few thousand dollars (something like $22k seems reasonable), then pullback and retest that $20k which will then become support, then from there I think we launch to much higher numbers over the following weeks/months.
Happy trading!
Stay informed my friends.
-Doc
