A sharp reversal in the price of Bitcoin (BTC) out of an otherwise bearish technical setup has raised its chances of reaching $58,000 in Q2.
Bitcoin price bottoming out?
On the daily timeframe, Bitcoin broke out of its ascending triangle on March 27 to the upside, bringing the much-anticipated level of $50,000 within its range.
Interestingly, ascending triangles are continuation patterns, meaning they typically resolve by sending the price in the direction of its previous trend once it breaks out of their tightening range.
Bitcoin, which was trending downwards before forming an ascending triangle, avoided further downside. Instead, it managed to break above the pattern’s upper horizontal trendline around $45,000, and followed the move upwards by hitting almost $47,700, a level last claimed on Jan. 2, 2022.
This turned out to be among the few cases wherein ascending triangles emerge at the end of a downtrend. For instance, Bitcoin underwent a sharp upside retracement — from $3,100 to $14,000 — after painting a similar triangle pattern between December 2018 and April 2019, as veteran market analyst Peter Brandt noted on March 28.
The $BTC pattern is called an ascending triangle (right). Read about Asc Tris in Schabacker, Study III, pgs 93-
Also, compare present pattern to similar structure in 2019 (left) #Bitcoin pic.twitter.com/IyB2j7f8F6— Peter Brandt (@PeterLBrandt) March 27, 2022
The fractal raises Bitcoin’s potential to undergo a decisive breakout out of its “reversal ascending triangle,” for an extended price rally toward the level that is at a length equal to the maximum distance between the triangle’s upper horizontal and lower rising trendline, i.e. around $58,000, as shown in the chart below.
Weekly timeframe: $69K next?
Independent analyst “dave the wave” meanwhile anticipates Bitcoin to rally toward its current record high at $69,000.
The analyst churned out the bullish forecast based on a broader ascending triangle pattern, coupled with Bitcoin’s logarithmic support level, on a weekly scale.
Nonetheless, his setup also posed possibilities of Bitcoin crashing back below $40,000 after failing to break $69,000.
I think the way you have your chart highlighted could be a real possibility
— Peter Brandt (@PeterLBrandt) March 28, 2022
Why $52,500 is the most decisive level
Bitcoin ascending triangles in both shorter- and longer-timeframe charts present extremely bullish outlooks. However, immediate downside risks are still present when considering critical weekly moving averages and Fibonacci retracement levels.
Notably, Bitcoin’s ongoing upside move occurred after it tested its 100-week exponential moving average (100-week EMA; the black wave) repeatedly as support.
Meanwhile, a 0.236 Fib line (near $36,000) of the Fibonacci retracement graph — drawn from $69,000-swing high to $26,000-swing low — acted as an additional support. The $26,000-level coincides with the 200-week EMA (the blue wave).
Interestingly, the rebound appeared exactly similar to price actions witnessed between November 2019 and January 2020. Back then, BTC’s price rally exhausted upon reaching the 0.618 Fib line (near $10,500) in February 2020, leading to a correction towards the 200-week EMA a month later.
Related: Bitcoin sellers keep BTC price action in check amid $45K ‘fakeout’ warning
If Bitcoin repeats the same move in 2022, the BTC/USD pair could reach its current 0.618 Fib line near $52,500, only then to correct back toward the 200-week EMA near $26,000. Conversely, a decisive move above the Fibonacci level could trigger the ascending triangle setups, as discussed above.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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