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Bitcoin Breaks Out of Consolidation Range, What Next?

Bitcoin has broken out above a consolidation range for more than 3 weeks. It is expected to continue rising towards the target of the long-term bullish pattern.

Weekly outlook

After hitting a low of $15.4k in June 2022, Bitcoin started to rally and formed the right shoulder of an inverse head and shoulders (H&S) pattern. This is a bullish pattern that often leads to a reversal of the downtrend to an uptrend.

Indeed, the price broke out of the pattern in the week from March 13 to March 20, 2023, with a large bullish candle, marking the formation of a long-term bottom. This technical pattern has a target of $41.5k, calculated by adding the height of the pattern to the breakout point. This level also coincides with the 0.5-0.618 Fibonacci retracement resistance zone of the entire downtrend, so it could act as the top for this rally.

After the breakout, the price stalled at the small resistance zone of $28.8k for about three weeks before continuing the uptrend. This is a very positive signal as it shows that the bulls are actively buying at higher levels, and the uptrend could continue for some time.

Therefore, the price of Bitcoin is likely to break out of the next small resistance zone at $32k and move towards the pattern target of $41.5k.

The RSI indicator supports this view as it is near the oversold zone and is trending up.

bitcoin-uptrend
BTC/USDT weekly chart. Source: TradingView

Short-term parallel channel

The 4-hour chart shows that Bitcoin has broken out of a parallel channel that has been formed since March 17.

As this channel has existed for more than 23 days, the post-breakout movement will be very strong. Therefore, the BTC price could quickly rise to the channel target of $31.5 without any significant correction.

The RSI indicator supports this possibility as it is in the oversold zone but has not generated any bearish divergence.

bitcoin-uptrend
BTC/USDT 4-hour chart. Source: TradingView

Conclusion

The most likely outlook shows that the BTC price will continue to rise to $32k and break out thereafter. If successful, it will rise to the pattern target of $41.5k.

This bullish view will be invalidated if the BTC price suddenly reverses and drops back inside the channel. This could cause the BTC price to break down below the channel and fall to the important support zone at $25k.

Disclaimer: Please note that this article is for informational purposes only and should not be taken as investment advice. As an investor, it is important to do your own research before making any decisions. We are not responsible for any investment decisions you make based on this information. Not Financial Advice.

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