Bitcoin recently consolidated inside a pennant or symmetrical triangle pattern just above an area of interest. Price is showing early bullish signs as it closes past the continuation pattern’s resistance, indicating that a rally of the same height as the flag’s mast may be in the works.
The Fibonacci extension tool also shows the next potential upside targets. The 38.2% level is near the $7,200 area of interest while the 78.6% level is closer to the swing high at $7,800. Stronger bullish pressure could take Bitcoin up to the full extension at $8,144.
The 100 SMA crossed above the longer-term 200 SMA to confirm that the path of least resistance is to the upside or that the rally is more likely to carry on than to reverse. The 100 SMA is also inching close to the bottom of the consolidation pattern, adding another layer of support in the event of a dip.
Stochastic has some room to climb before hitting overbought levels but appears to be turning back down to indicate that sellers are returning. RSI is still cruising sideways to reflect range-bound action and has yet to catch up to the upside break.
While the sharp jump in Bitcoin is mostly attributed to the selloff in Tether earlier on, many believe that industry developments recently could be enough to sustain the longer-term climb. In particular, Fidelity’s institutional investment platform for Bitcoin and Ethereum could be enough to bring in an influx of funds from larger market players, thereby keeping demand and price strongly supported.
Still, there is some degree of uncertainty when it comes to regulation, especially since the IMF recently reminded watchdogs to step up their efforts in protecting consumers from potential fraud. With that, the SEC decision on Bitcoin ETF applications could still carry a lot of weight when it comes to determining whether a strong uptrend could gain traction or not.
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