What you need to know
- Bitcoin rose above $100,000 on late Wednesday for the first ever time as investors betted the Trump Administration and Congress will adopt policies that would benefit cryptocurrency.
- Bitcoin’s recent move upwards has been accelerated by the breakout above the newly formed pennant. This chart pattern signals the continuation of Bitcoin’s rise.
- Measure moved which adds up the amount of impulsive upward movement that occurred before the pennant to the pattern’s trendline at the top, predicts an upside target of $129.930.
- Investors should monitor key support levels on Bitcoin's chart around $90,500, $80,500 and $70,000.
The Bitcoin price (BTCUSD), which is the currency market’s main cryptocurrency, surpassed $100,000 on Wednesday for the very first time as investors betted that the new Trump Administration and Congress would support policies to benefit the crypto market.
The rally on Wednesday was held in response to the news that Donald Trump, President-elect, had named Paul Atkins as his nominee for Securities and Exchange Commission Director. Atkins replaces crypto critic Garry Gensler. Gensler announced that he will step down at the end of January.
Bitcoin traded at around $103,000 in recent days, compared to $95,000 just before the news broke of SEC’s nomination. Bitcoin’s price has risen by more than 45% since the elections, as investors have hoped for more crypto-friendly policy.
Here, we examine Bitcoin’s technicals and identify important price levels.
Pennant Pattern Breakout
Bitcoin, with its recent move to $100,000, has broken through a pennant pattern. This chart pattern signals that the current upward movement of Bitcoin will continue.
The 50-day MA crossed over the 200-day MA in late October, creating a gold cross. This is a strong bullish sign that supports the uptrend of the cryptocurrency.
The relative strength (RSI), which confirms the bullish momentum of the price with a score above 70, also shows overbought conditions, increasing the likelihood that short-term profits will be taken.
We’ll now apply technical analysis to forecast a bullish price target, as Bitcoin enters price discovery. Let’s also identify key support levels that we should monitor when Bitcoin dips.
A Bullish Target for Measured Movement
Investors can project potential Bitcoin price targets using a measure move. This is also called the measuring principle.
The technique involves adding the amount of the impulsive upward move that occurred before the pennant to the top trendline. We add $97.500 to $32,430 in this example, which predicts that the bullish target is $129,930.
Monitoring Key Support Levels
Bitcoin could fall by around $95,000 due to a wave of profit-taking. This location may be supported near the low of the pennant chart and the brief period of consolidation that occurred in November.
If you sell below this area, the $85,500 range may be in play. The area is currently just below the 50-day MA and could draw buying interest at the opening and closing levels of the two bullish candles last week.
Investors would be likely to seek out entry points around the top trendline of the previous trading range if a bearish drop were to occur. As the 200-day MA continues to increase, this location may also be supported by the close-watched indicator.
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The author of this article does not currently own any securities listed above.
CORRECTION: This article has been updated with the correct day of bitcoin's move above $100,000.
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