Bitcoin’s (BTC) price is largely unchanged on the day and maybe building for a strong exit from the weeks-long tight trading range.
The leading cryptocurrency hit highs above $4,100 on Jan. 8 and has charted lower price highs ever since.
Meanwhile, the bears have persistently failed to keep prices below $3,500, weakening the bearish case put forward by the 9 percent drop seen on Jan. 10.
Essentially, BTC has created a descending triangle over the last 2.5 weeks. The pattern is identified by trendlines connecting lower price highs and strong support.
As of writing, the upper edge of the triangle is seen at $3,600 and the lower edge is located near $3,500. Meanwhile, bitcoin is trading at $3,550 on Bitstamp, representing a 0.4 percent change on a 24-hour basis.
The probability of a bullish breakout is high as sellers seem to have run out of steam. After all, the cryptocurrency barely moved following the latest exchange-traded fund (ETF) withdrawal on Wednesday.
Further, with daily trading range at lows below $50.00, the breakout could happen in the next 24 hours.
On Thursday, the spread between the high and low (trading range) stood near the three-month low of $45.17 registered on Jan. 12. That was the fourth below-$50 trading range of this month, according to CoinMarketCap.
What’s more important is that on the previous three occasions the trading range had widened sharply on the following day.
4-hour chart
A convincing break above $3,600 on the 4-hour chart would confirm a triangle breakout and open the doors to $3,774 (Jan. 19 high). A violation there would expose the psychological hurdle of $4,000.
It is worth noting that the descending triangle is widely considered as a bearish continuation setup – the pattern often ends up accelerating the preceding move.
As a result, a downside break, if confirmed, could prove costly.
View
- Bitcoin is more likely to witness a triangle breakout in the next 24 hours. That would allow a rally to resistances lined up at $3,774 and $4,000.
- A triangle breakdown – acceptance below $3,470 – would reinforce the primary bearish tend (downward sloping 10-week moving average) and boost odds of a drop to December lows near $3,100.
Disclosure: The author holds no cryptocurrency at the time of writing.
Bitcoin image via CoinDesk archives; charts by Trading View
