Bitcoin: Technical analysis favours more gains
<p><strong>By <a href="http://investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a></strong></p>
<ul>
<li>Bitcoin pulls back after soaring to 6-week high</li>
<li>Prices broke beyond neckline of “inverse head-and-shoulders”</li>
<li>$30k handle could be attained if pattern plays out</li>
<li>ADX, RSI indicators also suggest more immediate headroom</li>
</ul>
<h3>Bitcoin on Monday (Oct 2nd) surged to its highest levels since Aug. 17th!</h3>
<p>Cryptos climbed as Ether futures exchange-traded funds (ETF) were launched in the US at the start of this week.</p>
<p> </p>
<p>Along the way, Bitcoin <strong>broke through the neckline of an inverse head-and-shoulder pattern</strong>, to a high of <strong>$28604.38. </strong></p>
<p>Bulls delivered a strong close above its 50-day SMA but gave up close to 50% of its rally for the day.</p>
<p>This “area of surrender” for Bitcoin bulls coincides with the <strong>resistance line of the upward-sloping channel</strong>, drawn from the September 1st high of $26,137.37.</p>
<p><img decoding="async" fetchpriority="high" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/Bitcoin%201.png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="4672825e-0764-417a-9326-c69da906be5f" data-src="/s3-static/users/user16/Bitcoin%201.png" /></p>
<p> </p>
<h3><strong>Inverse head-and-shoulder pattern has measured move objective of $2,633.38.</strong></h3>
<p>Note that Bitcoin has been able to retrace its steps from that <strong>$24,871.78 </strong>inverse head’s intraday low on September 11th, back towards its neckline.</p>
<p>This suggests that a similar-sized move ($2,633.38) could materialize to the upside</p>
<blockquote>
<h3><strong><em>In fewer words, should this pattern play out, Bitcoin may get to within touching distance of the $30,000 handle. </em></strong></h3>
</blockquote>
<p>According to Thomas Bulkowski, in his book “The Encyclopedia of Chart patterns” this reversal pattern has a 9% failure rate and meets its target 51% of the time.</p>
<p> </p>
<h3><strong>Broken neckline: retested</strong></h3>
<p>At the time of writing, Bitcoin is paring yesterday’s surge to move back closer to the broken neckline.</p>
<p>Failure to close back below the broken neckline or the significant 78.6 Fibonacci level at <strong>$27446.25,</strong> could embolden Bitcoin bulls to test the 100 Fibonacci level at <strong>$28147.19</strong> with eyes set on the upper line of the ascending channel mentioned above.</p>
<p>The Fibonacci levels are taken from August 29th’s high at 28147.19 to September 11th’s low of $24871.78.</p>
<p><img decoding="async" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/Bitcoin%202_0.png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="47cd309f-0203-48c9-89a4-0307ffab60e8" data-src="/s3-static/users/user16/Bitcoin%202_0.png" /></p>
<p> </p>
<h3><strong>Technical indicators suggest limited immediate gains</strong></h3>
<p>The<strong> Average Directional Movement Index (ADX)</strong> – an indicator that displays directional trend strength – is showing a <strong>strong bullish strength</strong> as it is above its 20 threshold and pointing upwards.</p>
<p>Furthermore, we see the <strong>14-day relative strength index (RSI)</strong> tethering on the edge of being overbought, with room for a marginal move to the upside.</p>
<p> </p>
<blockquote>
<h3><em>Overall, Bitcoin bulls will be hoping that seasonality will kick in once more, given that Q4 tends to see double-digit gains for the world’s oldest and largest crypto.</em></h3>
</blockquote>
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<p><img decoding="async" class="size-full wp-image-54242 alignleft" src="https://www.investmacro.com/articles-analysis/wp-content/uploads/2014/07/Forex-Time-Logo.png" alt="Forex-Time-Logo" width="262" height="90" /><strong>Article by <span><a href="https://www.investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a></span></strong></p>
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