Bitcoin (CRYPTO: BTC) broke up bullishly from a falling channel pattern shortly after midnight on Monday, which Benzinga predicted would happen on Friday.
The falling channel pattern is bearish for the short term but can be bullish down the road.
For bearish traders, the "trend is your friend" (until it's not) and the stock is likely to continue downwards. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.
Bullish traders will want to watch for a break up from the upper descending trendline, on high volume, for an entry. When a stock breaks up from a descending channel, it's a powerful reversal signal and indicates a rally is likely in the cards.
Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.
The Bitcoin Chart: When Bitcoin broke up from the falling channel it was on higher-than-average volume, which indicates the pattern was recognized. The break up from the formation also negated the downtrend Bitcoin had been trading in within the channel.
- In order for Bitcoin to confirm a new uptrend, the crypto will need to print a higher low above the most recent low of $22,392, which was formed on Aug. 4. Bullish traders would prefer for Bitcoin to hold above the upper descending trendline of the falling channel when the next low is formed.
- If Bitcoin closes the trading day with an upper wick, Bitcoin may decline during Tuesday’s 24-hour trading session to print its next low. If the crypto closes the trading session near its high of day price, the crypto will print a bullish Marubozu candlestick, which could indicate higher prices are on the horizon.
- Bitcoin is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. Bitcoin is also trading above the 50-day simple moving average, which indicates longer-term sentiment is bullish.
- Bitcoin has resistance above at $25,772 and $29,321 and support below at $22,729 and $19,915.
See Also: Dogecoin Daily: Price Consolidates As Crypto Sheds Equity Correlation, Key DOGE Building Block Could Make Its Way To Android
Photo: Kaspars Grinvalds via Shutterstock
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.