The bitcoin price has updated its historical high after a deep correction, once again demonstrating that institutional and retail investors continue to buy the asset with each decline in quotations.
Bitcoin itself is in a powerful uptrend. While the first cryptocurrency remains at the top of the market, gold continues to decline. Many major players openly declare closing positions in gold and buying bitcoin and Ethereum in the ratio of 80 to 20. Updating the historical maximum also fuels interest from new investors ready to buy “digital gold” at any price, to have time to enter the market before a new wave of growth.
However, not all traders are confident that growth will continue. John Bollinger, the author of the famous indicator, warns investors that the bitcoin price’s current movement is very similar to the classic pattern that marks the top of the market.
However, while there is no confirmation of this model in the form of a breakdown of the support level at $16,200, it is too early to talk about a market reversal. Also, this price structure can be easily “broken” by buyers in the event of further upward movement. For this reason, you need to be very careful at current historical levels.
We are likely talking about the “Double top” model when the price twice unsuccessfully tests the resistance level, and then it falls with a breakdown of the lower border of the model. In this case, you can expect the asset value to decrease by the height of the model. If the bulls fail to break through $20,000 and the price falls below the $16,300 level, we should expect it to fall further to $13,070.
From the technical analysis point, BTC is moving within a confident uptrend — the price did not even reach the fast Moving average during the correction. The RSI indicator starts from the support line, which is an additional signal in favor of price growth.
However, buyers need to gain a foothold above the $19,705 level to “break” the reversal pattern mentioned by John Bollinger. Otherwise, with the breakdown of the bullish channel’s lower border and the price-fixing under the level of $17,525, the asset may go into a prolonged correction.
An inverted “Head and shoulders” pattern is formed on the 4-hour chart. This pattern is not quite a template here because of the slope of the “Neck” line, and in this case, the price does not always break through it — often, there is a rebound up from the level of the right “Shoulder.” So very shortly, the aggressive growth of BTC with an update of the historical maximum is possible.
If the price can gain a foothold above the “Neck” line, we can talk about the asset continuing to grow to the level of $21,500 or higher. An additional signal in favor of this scenario is a rebound from the trend line on the RSI indicator, which can cause a breakdown of the nearest resistance’s closing price.