Bitcoin bulls should be prepared for a wild uptrend towards $ 41,000.
According to Scott Melker, crypto trader and host of WOAS Podcast, the sharp rebound in cryptocurrency from $ 32,000 to over $ 38,000 confirmed two bullish textbook reversal indicators: Double Bottom and Falling Wedge.
Bitcoin double bottom
Starting with the double bottom, Mr. Melker highlighted two consecutive valleys in the Bitcoin four-hour table (4H), with a moderate peak in between. Such a structure suggests repeated rejection by bears. Meanwhile, when an asset rebounds from the second low and closes above the previous high, its vitality increases.
Bitcoin closed above the double bottom target – the pink line. Source: BTCUSD on TradingView.com Bitcoin has closed above the double bottom target – the pink line. Source: BTCUSD on TradingView.com
So it appears that Bitcoin did the same thing during its rally on Friday which prompted Mr. Melker to see an extended upward rally to complete the double bottom scenario. Bitcoin nearly hit the bullish reversal target by hitting the pink line near $ 34,880 as shown in the graph above and waiting for confirmation with a four hour close.
“The pink line [stands] broken, double bottom, which has to be confirmed with a closure at the top, ”remarked Mr. Melker nevertheless. “Target shown at 41K. The EQ of the trading area is also broken should an area high be reached. “
[Note: The Double Bottom target stands confirmed as of this press time.]
The other bullish reversal indicator, Falling Wedge, also pointed to a rally towards USD 41,000 or more after Bitcoin broke out on Friday.
In retrospect, a falling wedge in an uptrend is a continuation pattern that occurs when the market contracts temporarily. The structure indicates the resumption of the uptrend. This, in turn, means that traders can look for potential buying opportunities when the price closes above the upper trendline of the pattern.
Bitcoin did the same today. The cryptocurrency also closed above $ 36,000, a level with a recent history that limited upside gains. It hinted at renewed buying enthusiasm above the critical price floors, suggesting that traders are looking to move Rising Wedge’s breakout targets upwards.
Bitcoin falling wedge pattern suggests a rally towards USD 50,000. Source: BTCUSD on TradingView.com Bitcoin falling wedge pattern indicating a rally towards USD 50,000. Source: BTCUSD on TradingView.com
Typically, an asset increases by the maximum distance between the top and bottom trend lines of a wedge. For Bitcoin, the gap is more than $ 11,000. With that, Bitcoin is on the way to $ 50,000.