Technical Analysis: Bitcoin Breaks Out of Bullish Pattern, $35k in Target?
Bitcoin has confirmed a long-term bullish reversal pattern and may continue to rise in the near future. The Federal Reserve’s balance sheet expanded by an additional $297 billion to $8.63 trillion this week, leading the Crypto Twitter community to believe that the world’s most powerful central bank has launched a quantitative easing (QE) campaign.
Head and shoulders pattern
After reaching an all-time high of $69k in September 2021, Bitcoin began a long-term downtrend. This movement led to a low of $15.4k in June 2022 before bouncing back.
The recovery has helped the price complete the right shoulder of an inverse head and shoulders pattern. This is a bullish pattern that often leads to a trend reversal to the uptrend.
Indeed, the price broke out above the pattern on March 17, 2023 with a large bullish candle, marking the continuation of the uptrend. This technical pattern has a target of $35k, calculated by connecting the height of the pattern to the breakout point.
On the way to this target, there are minor resistance levels at $28k and $32k. However, these levels may be overcome as BTC just broke out of a pattern that lasted over 9 months.
The RSI indicator supports this view as it quickly recovered from oversold to overbought territory, indicating strong buying momentum.
Short-term correction
After a strong rally from $20k on March 10, Bitcoin touched a ascending resistance line formed since January 21. This line has rejected the price several times, so Bitcoin may be rejected again.
In addition, the RSI indicator has formed a bearish divergence on the 4-hour chart, supporting the possibility of a correction.
If so, Bitcoin may correct to the range of $25.8k-$26.2k, formed by the previous high and the 0.382-0.5 Fibonacci retracement level of the recent rally.
Overall, the most likely prospect is that Bitcoin will continue to rise to the target of $35k. However, the price may correct to the range of $25.8k-$26.2k before continuing to rise.
The uptrend will continue when the price breaks out of the high on March 17 at $27.7k.
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