The $BTC price surged out of a descending channel on Wednesday and hit $119,500 before pulling back slightly. With short-term indicators signalling an overbought condition, this would be a good time for a short pull-back and retest of the breakout. A major rally could then take place. $BTC breaks out of descending channel Source: TradingView As can be seen on the above 8-hour chart, the $BTC price has been traversing within a descending channel, from which it broke out on Wednesday. Descending channels are bullish formations so it would be expected that the price will carry on up to the all-time high and beyond. A measured move of the channel breakout would take the price to around $130,000. Nevertheless, when a breakout occurs from such a pattern, technical analysis tells us that the price will usually return to the breakout zone in order to test and confirm it before rising again. In the chart above it can be observed that a small red candle has formed, which might be the first sign that a corrective impulse is inbound. All the shorter term time frame Stochastic RSI indicators, up to the 12-hour, are at their tops, and so a period of consolidation would be healthy here in order to allow them to reset to a lower level. The Relative Strength Index (RSI) at the bottom of the chart has its indicator line just inside overbought territory so it would also be good for this to come back down somewhat. Given the slightly overextended nature of this current move, it may well be that the price could even reenter the channel. If it does so, the $113,000 horizontal support level could potentially be a good base for a bounce. As long as the bulls prevent the price going below $109,000 and making a lower low, a rally to new all-time highs is still the more likely scenario. Death cross confirmed in daily time frame Source: TradingView In the daily chart it can be seen that the death cross (50-day SMA crossing below the 100-day SMA) has now taken place. However, with the price action holding support at the 50-day SMA and well above it, a cross-back may not be too far off. The Stochastic RSI indicators in the daily time frame are still signalling upside momentum but this may not be for too much longer. At the bottom of the chart, the Relative Strength Index (RSI) could witness the indicator line turning back down to test and confirm the trendline breakout. Weekly chart shifts bullish Source: TradingView The weekly chart has become far more bullish, and that has only happened in the course of the last couple of weeks. Last week, the $BTC price came all the way back down to retest the $109,000 horizontal support level, and from there the price has surged more than $10,000. As mentioned earlier, the price broke through the descending channel and has managed to just touch the last major resistance at $119,500. A pullback to the top of the channel, followed by a surge into next week, could spark the beginnings of the next leg higher. The Stochastic RSI indicators have changed from a certain-looking cross down at the start of the week, to the blue indicator line getting back above the orange line, while the MACD is starting to show that the blue indicator line could be moving back up to cross above the orange signal line. All appears to be set for Bitcoin to make its next big move. However, it must be borne in mind that a corrective impulse could occur over the next day or two. As an investor, this is probably not the time to get shaken out. 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.
